Correlation Between Personalis and Guardant Health

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

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

Diversification Opportunities for Personalis and Guardant Health

-0.32

Correlation Coefficient

Personalis  Guardant Health

Very good diversification

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

Pair Corralation between Personalis and Guardant Health

Given the investment horizon of 90 days Personalis is expected to under-perform the Guardant Health. In addition to that, Personalis is 1.14 times more volatile than Guardant Health. It trades about -0.11 of its total potential returns per unit of risk. Guardant Health is currently generating about 0.13 per unit of volatility. 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

Personalis  vs.  Guardant Health

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.

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.

Pair Trading with Personalis and Guardant Health

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

The idea behind Personalis and Guardant Health 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.