Correlation Between EXACT Sciences and Caredx

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

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

Diversification Opportunities for EXACT Sciences and Caredx

0.47

Correlation Coefficient

EXACT Sciences  Caredx

Very weak diversification

The 3 months correlation between EXACT and Caredx is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding EXACT Sciences and Caredx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caredx Inc and EXACT Sciences 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 EXACT Sciences are associated (or correlated) with Caredx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caredx Inc has no effect on the direction of EXACT Sciences i.e., EXACT Sciences and Caredx go up and down completely randomly.

Pair Corralation between EXACT Sciences and Caredx

Given the investment horizon of 90 days EXACT Sciences is expected to generate 1.05 times more return on investment than Caredx. However, EXACT Sciences is 1.05 times more volatile than Caredx Inc. It trades about -0.04 of its potential returns per unit of risk. Caredx Inc is currently generating about -0.11 per unit of risk. If you would invest  6,873  in EXACT Sciences on September 24, 2024 and sell it today you would lose (980.00) from holding EXACT Sciences or give up 14.26% of portfolio value over 90 days.

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

EXACT Sciences  vs.  Caredx Inc

EXACT Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EXACT Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Caredx Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caredx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with EXACT Sciences and Caredx

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

The idea behind EXACT Sciences and Caredx Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..