Correlation Between Natera and Laboratory

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

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

Diversification Opportunities for Natera and Laboratory

-0.67

Correlation Coefficient

Natera  Laboratory

Excellent diversification

The 3 months correlation between Natera and Laboratory is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Natera Inc and Laboratory of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratory and Natera 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 Natera Inc are associated (or correlated) with Laboratory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laboratory has no effect on the direction of Natera i.e., Natera and Laboratory go up and down completely randomly.

Pair Corralation between Natera and Laboratory

Given the investment horizon of 90 days Natera Inc is expected to generate 2.51 times more return on investment than Laboratory. However, Natera is 2.51 times more volatile than Laboratory of. It trades about 0.12 of its potential returns per unit of risk. Laboratory of is currently generating about -0.03 per unit of risk. If you would invest  5,621  in Natera Inc on February 7, 2024 and sell it today you would earn a total of  4,077  from holding Natera Inc or generate 72.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.46%
Values	Daily Returns

Natera Inc  vs.  Laboratory of

Natera Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Natera Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Natera sustained solid returns over the last few months and may actually be approaching a breakup point.

Laboratory

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Laboratory of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Natera and Laboratory

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

The idea behind Natera Inc and Laboratory of 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.