Correlation Between Tenet Healthcare and Guardian Pharmacy

Can any of the company-specific risk be diversified away by investing in both Tenet 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 Tenet 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 Tenet Healthcare and Guardian Pharmacy Services,, you can compare the effects of market volatilities on Tenet 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 Tenet Healthcare with a short position of Guardian Pharmacy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenet Healthcare and Guardian Pharmacy.

Diversification Opportunities for Tenet Healthcare and Guardian Pharmacy

-0.35

Correlation Coefficient

Tenet Healthcare  Guardian Pharmacy

Very good diversification

The 3 months correlation between Tenet and Guardian is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tenet 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 Tenet 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 Tenet 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 Tenet Healthcare i.e., Tenet Healthcare and Guardian Pharmacy go up and down completely randomly.

Pair Corralation between Tenet Healthcare and Guardian Pharmacy

Considering the 90-day investment horizon Tenet Healthcare is expected to under-perform the Guardian Pharmacy. But the stock apears to be less risky and, when comparing its historical volatility, Tenet Healthcare is 1.47 times less risky than Guardian Pharmacy. The stock trades about -0.02 of its potential returns per unit of risk. The Guardian Pharmacy Services, is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,600  in Guardian Pharmacy Services, on October 22, 2024 and sell it today you would earn a total of  469.00  from holding Guardian Pharmacy Services, or generate 29.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	63.2%
Values	Daily Returns

Tenet Healthcare  vs.  Guardian Pharmacy Services,

Tenet Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tenet Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 conflicting fundamental indicators, Guardian Pharmacy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tenet Healthcare and Guardian Pharmacy

The main advantage of trading using opposite Tenet Healthcare and Guardian Pharmacy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tenet 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 Tenet 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 Global Correlations module to find global opportunities by holding instruments from different markets.