Correlation Between Charles River and Caredx

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

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

Diversification Opportunities for Charles River and Caredx

0.16

Correlation Coefficient

Charles River  Caredx

Average diversification

The 3 months correlation between Charles and Caredx is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Charles River Laboratories and Caredx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caredx Inc and Charles River 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 Charles River Laboratories are associated (or correlated) with Caredx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caredx Inc has no effect on the direction of Charles River i.e., Charles River and Caredx go up and down completely randomly.

Pair Corralation between Charles River and Caredx

Considering the 90-day investment horizon Charles River Laboratories is expected to generate 0.7 times more return on investment than Caredx. However, Charles River Laboratories is 1.42 times less risky than Caredx. It trades about -0.08 of its potential returns per unit of risk. Caredx Inc is currently generating about -0.18 per unit of risk. If you would invest  19,154  in Charles River Laboratories on October 6, 2024 and sell it today you would lose (574.00) from holding Charles River Laboratories or give up 3.0% of portfolio value over 90 days.

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

Charles River Laboratories  vs.  Caredx Inc

Charles River Labora

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charles River Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Charles River is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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 conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Charles River and Caredx

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

The idea behind Charles River Laboratories and Caredx 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.