Correlation Between Guardant Health and OPTIMIZERx Corp

Can any of the company-specific risk be diversified away by investing in both Guardant Health and OPTIMIZERx Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Guardant Health and OPTIMIZERx Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guardant Health and OPTIMIZERx Corp, you can compare the effects of market volatilities on Guardant Health and OPTIMIZERx Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Guardant Health with a short position of OPTIMIZERx Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardant Health and OPTIMIZERx Corp.

Diversification Opportunities for Guardant Health and OPTIMIZERx Corp

0.42

Correlation Coefficient

Guardant Health  OPTIMIZERx Corp

Very weak diversification

The 3 months correlation between Guardant and OPTIMIZERx is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and OPTIMIZERx Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPTIMIZERx Corp and Guardant Health is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Guardant Health are associated (or correlated) with OPTIMIZERx Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPTIMIZERx Corp has no effect on the direction of Guardant Health i.e., Guardant Health and OPTIMIZERx Corp go up and down completely randomly.

Pair Corralation between Guardant Health and OPTIMIZERx Corp

Allowing for the 90-day total investment horizon Guardant Health is expected to generate 1.59 times less return on investment than OPTIMIZERx Corp. But when comparing it to its historical volatility, Guardant Health is 1.6 times less risky than OPTIMIZERx Corp. It trades about 0.13 of its potential returns per unit of risk. OPTIMIZERx Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  528.00  in OPTIMIZERx Corp on December 30, 2024 and sell it today you would earn a total of  336.00  from holding OPTIMIZERx Corp or generate 63.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Guardant Health  vs.  OPTIMIZERx Corp

Guardant Health

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guardant Health are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Guardant Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

OPTIMIZERx Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OPTIMIZERx Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, OPTIMIZERx Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guardant Health and OPTIMIZERx Corp

The main advantage of trading using opposite Guardant Health and OPTIMIZERx Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardant Health position performs unexpectedly, OPTIMIZERx Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in OPTIMIZERx Corp will offset losses from the drop in OPTIMIZERx Corp's long position.

The idea behind Guardant Health and OPTIMIZERx Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.