Correlation Between National HealthCare and Guardian Pharmacy

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

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

Diversification Opportunities for National HealthCare and Guardian Pharmacy

0.2

Correlation Coefficient

National HealthCare  Guardian Pharmacy

Modest diversification

The 3 months correlation between National and Guardian is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding National HealthCare and Guardian Pharmacy Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Pharmacy and National HealthCare 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 National HealthCare are associated (or correlated) with Guardian Pharmacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Pharmacy has no effect on the direction of National HealthCare i.e., National HealthCare and Guardian Pharmacy go up and down completely randomly.

Pair Corralation between National HealthCare and Guardian Pharmacy

Considering the 90-day investment horizon National HealthCare is expected to under-perform the Guardian Pharmacy. But the stock apears to be less risky and, when comparing its historical volatility, National HealthCare is 2.56 times less risky than Guardian Pharmacy. The stock trades about -0.3 of its potential returns per unit of risk. The Guardian Pharmacy Services, is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,012  in Guardian Pharmacy Services, on October 7, 2024 and sell it today you would lose (33.00) from holding Guardian Pharmacy Services, or give up 1.64% of portfolio value over 90 days.

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

National HealthCare  vs.  Guardian Pharmacy Services,

National HealthCare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National HealthCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Guardian Pharmacy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Pharmacy Services, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Guardian Pharmacy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National HealthCare and Guardian Pharmacy

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

The idea behind National HealthCare and Guardian Pharmacy Services, 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..