Correlation Between Myriad Genetics and Psychemedics

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

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

Diversification Opportunities for Myriad Genetics and Psychemedics

0.29

Correlation Coefficient

Myriad Genetics  Psychemedics

Modest diversification

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

Pair Corralation between Myriad Genetics and Psychemedics

Given the investment horizon of 90 days Myriad Genetics is expected to generate 1.95 times more return on investment than Psychemedics. However, Myriad Genetics is 1.95 times more volatile than Psychemedics. It trades about 0.05 of its potential returns per unit of risk. Psychemedics is currently generating about -0.15 per unit of risk. If you would invest  2,350  in Myriad Genetics on February 18, 2024 and sell it today you would earn a total of  179.00  from holding Myriad Genetics or generate 7.62% return on investment over 90 days.

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

Myriad Genetics  vs.  Psychemedics

Myriad Genetics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Myriad Genetics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Myriad Genetics may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Psychemedics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Psychemedics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Myriad Genetics and Psychemedics

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

The idea behind Myriad Genetics and Psychemedics 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.