Correlation Between Guardant Health and Personalis

Can any of the company-specific risk be diversified away by investing in both Guardant Health and Personalis 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 Personalis into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guardant Health and Personalis, you can compare the effects of market volatilities on Guardant Health and Personalis 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 Personalis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardant Health and Personalis.

Diversification Opportunities for Guardant Health and Personalis

-0.32

Correlation Coefficient

Guardant Health  Personalis

Very good diversification

The 3 months correlation between Guardant and Personalis is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and Personalis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Personalis 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 Personalis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Personalis has no effect on the direction of Guardant Health i.e., Guardant Health and Personalis go up and down completely randomly.

Pair Corralation between Guardant Health and Personalis

Allowing for the 90-day total investment horizon Guardant Health is expected to generate 0.88 times more return on investment than Personalis. However, Guardant Health is 1.14 times less risky than Personalis. It trades about 0.13 of its potential returns per unit of risk. Personalis is currently generating about -0.11 per unit of risk. If you would invest  3,054  in Guardant Health on December 30, 2024 and sell it today you would earn a total of  1,260  from holding Guardant Health or generate 41.26% return on investment over 90 days.

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

Guardant Health  vs.  Personalis

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.

Personalis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Personalis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Guardant Health and Personalis

The main advantage of trading using opposite Guardant Health and Personalis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardant Health position performs unexpectedly, Personalis 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 Personalis will offset losses from the drop in Personalis' long position.

The idea behind Guardant Health and Personalis 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.