Correlation Between Guardant Health and Vivos Therapeutics

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

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

Diversification Opportunities for Guardant Health and Vivos Therapeutics

0.81

Correlation Coefficient

Guardant Health  Vivos Therapeutics

Very poor diversification

The 3 months correlation between Guardant and Vivos is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and Vivos Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivos Therapeutics 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 Vivos Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivos Therapeutics has no effect on the direction of Guardant Health i.e., Guardant Health and Vivos Therapeutics go up and down completely randomly.

Pair Corralation between Guardant Health and Vivos Therapeutics

Allowing for the 90-day total investment horizon Guardant Health is expected to generate 13.78 times less return on investment than Vivos Therapeutics. But when comparing it to its historical volatility, Guardant Health is 10.14 times less risky than Vivos Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Vivos Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,850  in Vivos Therapeutics on September 23, 2024 and sell it today you would lose (1,352) from holding Vivos Therapeutics or give up 73.08% of portfolio value over 90 days.

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

Guardant Health  vs.  Vivos Therapeutics

Guardant Health

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardant Health are ranked lower than 11 (%) 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.

Vivos Therapeutics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vivos Therapeutics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Vivos Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guardant Health and Vivos Therapeutics

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

The idea behind Guardant Health and Vivos Therapeutics 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.