Correlation Between Guardant Health and Thermo Fisher

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

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

Diversification Opportunities for Guardant Health and Thermo Fisher

-0.46

Correlation Coefficient

Guardant Health  Thermo Fisher

Very good diversification

The 3 months correlation between Guardant and Thermo is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific 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 Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of Guardant Health i.e., Guardant Health and Thermo Fisher go up and down completely randomly.

Pair Corralation between Guardant Health and Thermo Fisher

Allowing for the 90-day total investment horizon Guardant Health is expected to under-perform the Thermo Fisher. In addition to that, Guardant Health is 2.85 times more volatile than Thermo Fisher Scientific. It trades about -0.1 of its total potential returns per unit of risk. Thermo Fisher Scientific is currently generating about -0.04 per unit of volatility. If you would invest  57,745  in Thermo Fisher Scientific on February 1, 2024 and sell it today you would lose (873.00) from holding Thermo Fisher Scientific or give up 1.51% of portfolio value over 90 days.

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

Guardant Health  vs.  Thermo Fisher Scientific

Guardant Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guardant Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Thermo Fisher Scientific

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thermo Fisher Scientific are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Thermo Fisher is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Guardant Health and Thermo Fisher

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

The idea behind Guardant Health and Thermo Fisher Scientific 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.