Correlation Between Sotera Health and Myriad Genetics

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

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

Diversification Opportunities for Sotera Health and Myriad Genetics

0.72

Correlation Coefficient

Sotera Health  Myriad Genetics

Poor diversification

The 3 months correlation between Sotera and Myriad is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sotera Health Co and Myriad Genetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myriad Genetics and Sotera Health 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 Sotera Health Co are associated (or correlated) with Myriad Genetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myriad Genetics has no effect on the direction of Sotera Health i.e., Sotera Health and Myriad Genetics go up and down completely randomly.

Pair Corralation between Sotera Health and Myriad Genetics

Considering the 90-day investment horizon Sotera Health Co is expected to generate 0.7 times more return on investment than Myriad Genetics. However, Sotera Health Co is 1.44 times less risky than Myriad Genetics. It trades about -0.09 of its potential returns per unit of risk. Myriad Genetics is currently generating about -0.22 per unit of risk. If you would invest  1,536  in Sotera Health Co on September 1, 2024 and sell it today you would lose (219.00) from holding Sotera Health Co or give up 14.26% of portfolio value over 90 days.

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

Sotera Health Co  vs.  Myriad Genetics

Sotera Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sotera Health Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Myriad Genetics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Myriad Genetics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sotera Health and Myriad Genetics

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

The idea behind Sotera Health Co and Myriad Genetics 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.