Correlation Between BioLife Solutions and Natera

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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

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 8.85 times less return on investment than Natera. But when comparing it to its historical volatility, BioLife Solutions is 1.01 times less risky than Natera. It trades about 0.04 of its potential returns per unit of risk. Natera Inc is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  12,439  in Natera Inc on September 6, 2024 and sell it today you would earn a total of  4,961  from holding Natera Inc or generate 39.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

BioLife Solutions  vs.  Natera Inc

 Performance 
       Timeline  
BioLife Solutions 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
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

 
Weak
 
Strong
Good
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.

BioLife Solutions and Natera Volatility Contrast

   Predicted Return Density   
       Returns  

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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