Correlation Between Caredx and BioLife Solutions
Can any of the company-specific risk be diversified away by investing in both Caredx and BioLife Solutions 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 BioLife Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caredx Inc and BioLife Solutions, you can compare the effects of market volatilities on Caredx and BioLife Solutions 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 BioLife Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caredx and BioLife Solutions.
Diversification Opportunities for Caredx and BioLife Solutions
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caredx and BioLife is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Caredx Inc and BioLife Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLife Solutions 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 BioLife Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLife Solutions has no effect on the direction of Caredx i.e., Caredx and BioLife Solutions go up and down completely randomly.
Pair Corralation between Caredx and BioLife Solutions
Given the investment horizon of 90 days Caredx Inc is expected to generate 1.35 times more return on investment than BioLife Solutions. However, Caredx is 1.35 times more volatile than BioLife Solutions. It trades about 0.06 of its potential returns per unit of risk. BioLife Solutions is currently generating about 0.04 per unit of risk. If you would invest 1,161 in Caredx Inc on September 10, 2024 and sell it today you would earn a total of 1,343 from holding Caredx Inc or generate 115.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Caredx Inc vs. BioLife Solutions
Performance |
Timeline |
Caredx Inc |
BioLife Solutions |
Caredx and BioLife Solutions Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Caredx and BioLife Solutions
The main advantage of trading using opposite Caredx and BioLife Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caredx position performs unexpectedly, BioLife Solutions 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 BioLife Solutions will offset losses from the drop in BioLife Solutions' long position.Caredx vs. Castle Biosciences | Caredx vs. Twist Bioscience Corp | Caredx vs. Biodesix | Caredx vs. Natera Inc |
BioLife Solutions vs. Akoya Biosciences | BioLife Solutions vs. AtriCure | BioLife Solutions vs. ICU Medical | BioLife Solutions vs. Haemonetics |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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