Correlation Between Caribou Biosciences and Natera

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

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

Diversification Opportunities for Caribou Biosciences and Natera

0.04

Correlation Coefficient

Caribou Biosciences  Natera

Significant diversification

The 3 months correlation between Caribou and Natera is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and Natera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natera Inc and Caribou Biosciences 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 Caribou Biosciences 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 Caribou Biosciences i.e., Caribou Biosciences and Natera go up and down completely randomly.

Pair Corralation between Caribou Biosciences and Natera

Given the investment horizon of 90 days Caribou Biosciences is expected to under-perform the Natera. In addition to that, Caribou Biosciences is 2.01 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 -0.02 per unit of volatility. If you would invest  16,439  in Natera Inc on September 24, 2024 and sell it today you would lose (251.00) from holding Natera Inc or give up 1.53% of portfolio value over 90 days.

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

Caribou Biosciences  vs.  Natera Inc

Caribou Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caribou Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Caribou Biosciences is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Natera Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natera Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Natera sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caribou Biosciences and Natera

The main advantage of trading using opposite Caribou Biosciences and Natera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribou Biosciences 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 Caribou Biosciences 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.