Correlation Between Natera and Telo Genomics

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

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

Diversification Opportunities for Natera and Telo Genomics

-0.58

Correlation Coefficient

Natera  Telo Genomics

Excellent diversification

The 3 months correlation between Natera and Telo is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Natera Inc and Telo Genomics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telo Genomics Corp 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 Telo Genomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telo Genomics Corp has no effect on the direction of Natera i.e., Natera and Telo Genomics go up and down completely randomly.

Pair Corralation between Natera and Telo Genomics

Given the investment horizon of 90 days Natera Inc is expected to generate 0.26 times more return on investment than Telo Genomics. However, Natera Inc is 3.79 times less risky than Telo Genomics. It trades about 0.16 of its potential returns per unit of risk. Telo Genomics Corp is currently generating about 0.03 per unit of risk. If you would invest  6,117  in Natera Inc on September 20, 2024 and sell it today you would earn a total of  10,704  from holding Natera Inc or generate 174.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Natera Inc  vs.  Telo Genomics Corp

Natera Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Natera Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Natera sustained solid returns over the last few months and may actually be approaching a breakup point.

Telo Genomics Corp

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Telo Genomics Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Telo Genomics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Natera and Telo Genomics

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

The idea behind Natera Inc and Telo Genomics Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..