Correlation Between Guardian Pharmacy and P3 Health

Can any of the company-specific risk be diversified away by investing in both Guardian Pharmacy and P3 Health 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 Guardian Pharmacy and P3 Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guardian Pharmacy Services, and P3 Health Partners, you can compare the effects of market volatilities on Guardian Pharmacy and P3 Health 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 Guardian Pharmacy with a short position of P3 Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guardian Pharmacy and P3 Health.

Diversification Opportunities for Guardian Pharmacy and P3 Health

-0.29

Correlation Coefficient

Guardian Pharmacy  P3 Health

Very good diversification

The 3 months correlation between Guardian and PIIIW is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Pharmacy Services, and P3 Health Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on P3 Health Partners and Guardian Pharmacy 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 Guardian Pharmacy Services, are associated (or correlated) with P3 Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of P3 Health Partners has no effect on the direction of Guardian Pharmacy i.e., Guardian Pharmacy and P3 Health go up and down completely randomly.

Pair Corralation between Guardian Pharmacy and P3 Health

Given the investment horizon of 90 days Guardian Pharmacy Services, is expected to under-perform the P3 Health. But the stock apears to be less risky and, when comparing its historical volatility, Guardian Pharmacy Services, is 3.29 times less risky than P3 Health. The stock trades about -0.24 of its potential returns per unit of risk. The P3 Health Partners is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1.01  in P3 Health Partners on October 6, 2024 and sell it today you would earn a total of  0.20  from holding P3 Health Partners or generate 19.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

Guardian Pharmacy Services,  vs.  P3 Health Partners

Guardian Pharmacy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Pharmacy Services, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Guardian Pharmacy displayed solid returns over the last few months and may actually be approaching a breakup point.

P3 Health Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days P3 Health Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Guardian Pharmacy and P3 Health

The main advantage of trading using opposite Guardian Pharmacy and P3 Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardian Pharmacy position performs unexpectedly, P3 Health 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 P3 Health will offset losses from the drop in P3 Health's long position.

The idea behind Guardian Pharmacy Services, and P3 Health Partners 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.