Correlation Between Nextgen Healthcare and 10X Genomics

Can any of the company-specific risk be diversified away by investing in both Nextgen Healthcare and 10X 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 Nextgen Healthcare and 10X Genomics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nextgen Healthcare and 10X Genomics, you can compare the effects of market volatilities on Nextgen Healthcare and 10X 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 Nextgen Healthcare with a short position of 10X Genomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextgen Healthcare and 10X Genomics.

Diversification Opportunities for Nextgen Healthcare and 10X Genomics

0.71

Correlation Coefficient

Nextgen Healthcare  10X Genomics

Poor diversification

The 3 months correlation between Nextgen and 10X is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nextgen Healthcare and 10X Genomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 10X Genomics and Nextgen Healthcare 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 Nextgen Healthcare are associated (or correlated) with 10X Genomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 10X Genomics has no effect on the direction of Nextgen Healthcare i.e., Nextgen Healthcare and 10X Genomics go up and down completely randomly.

Pair Corralation between Nextgen Healthcare and 10X Genomics

If you would invest  1,653  in Nextgen Healthcare on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Nextgen Healthcare or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.54%
Values	Daily Returns

Nextgen Healthcare  vs.  10X Genomics

Nextgen Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextgen Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Nextgen Healthcare is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

10X Genomics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 10X Genomics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nextgen Healthcare and 10X Genomics

The main advantage of trading using opposite Nextgen Healthcare and 10X Genomics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextgen Healthcare position performs unexpectedly, 10X 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 10X Genomics will offset losses from the drop in 10X Genomics' long position.

The idea behind Nextgen Healthcare and 10X Genomics 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.