Correlation Between EXACT Sciences and Illumina

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

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

Diversification Opportunities for EXACT Sciences and Illumina

-0.11

Correlation Coefficient

EXACT Sciences  Illumina

Good diversification

The 3 months correlation between EXACT and Illumina is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding EXACT Sciences and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina 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 Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of EXACT Sciences i.e., EXACT Sciences and Illumina go up and down completely randomly.

Pair Corralation between EXACT Sciences and Illumina

Given the investment horizon of 90 days EXACT Sciences is expected to generate 1.29 times more return on investment than Illumina. However, EXACT Sciences is 1.29 times more volatile than Illumina. It trades about 0.07 of its potential returns per unit of risk. Illumina is currently generating about -0.02 per unit of risk. If you would invest  5,392  in EXACT Sciences on September 20, 2024 and sell it today you would earn a total of  224.00  from holding EXACT Sciences or generate 4.15% return on investment over 90 days.

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

EXACT Sciences  vs.  Illumina

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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Illumina

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Illumina are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Illumina is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with EXACT Sciences and Illumina

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

The idea behind EXACT Sciences and Illumina 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.