Correlation Between BioLife Solutions and Natera

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

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

Diversification Opportunities for BioLife Solutions and Natera

0.42

Correlation Coefficient

BioLife Solutions  Natera

Very weak diversification

The 3 months correlation between BioLife and Natera is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BioLife Solutions and Natera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natera Inc and BioLife Solutions 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 BioLife Solutions are associated (or correlated) with Natera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natera Inc has no effect on the direction of BioLife Solutions i.e., BioLife Solutions and Natera go up and down completely randomly.

Pair Corralation between BioLife Solutions and Natera

Given the investment horizon of 90 days BioLife Solutions is expected to generate 1.46 times less return on investment than Natera. In addition to that, BioLife Solutions is 1.2 times more volatile than Natera Inc. It trades about 0.1 of its total potential returns per unit of risk. Natera Inc is currently generating about 0.17 per unit of volatility. If you would invest  5,670  in Natera Inc on September 6, 2024 and sell it today you would earn a total of  11,232  from holding Natera Inc or generate 198.1% return on investment over 90 days.

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

BioLife Solutions  vs.  Natera Inc

BioLife Solutions

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BioLife Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, BioLife Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Natera Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Natera Inc are ranked lower than 17 (%) 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.

Pair Trading with BioLife Solutions and Natera

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

The idea behind BioLife Solutions and Natera 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.