Correlation Between Caredx and Axonics Modulation

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

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

Diversification Opportunities for Caredx and Axonics Modulation

-0.8

Correlation Coefficient

Caredx  Axonics Modulation

Pay attention - limited upside

The 3 months correlation between Caredx and Axonics is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Caredx Inc and Axonics Modulation Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axonics Modulation and Caredx 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 Caredx Inc are associated (or correlated) with Axonics Modulation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axonics Modulation has no effect on the direction of Caredx i.e., Caredx and Axonics Modulation go up and down completely randomly.

Pair Corralation between Caredx and Axonics Modulation

Given the investment horizon of 90 days Caredx Inc is expected to generate 2.48 times more return on investment than Axonics Modulation. However, Caredx is 2.48 times more volatile than Axonics Modulation Technologies. It trades about 0.07 of its potential returns per unit of risk. Axonics Modulation Technologies is currently generating about 0.06 per unit of risk. If you would invest  1,031  in Caredx Inc on September 10, 2024 and sell it today you would earn a total of  1,473  from holding Caredx Inc or generate 142.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.75%
Values	Daily Returns

Caredx Inc  vs.  Axonics Modulation Technologie

Caredx Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caredx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Axonics Modulation

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Axonics Modulation Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Axonics Modulation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Caredx and Axonics Modulation

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

The idea behind Caredx Inc and Axonics Modulation Technologies 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.