Correlation Between Quest Diagnostics and Fulgent Genetics

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

By analyzing existing cross correlation between Quest Diagnostics Incorporated and Fulgent Genetics, you can compare the effects of market volatilities on Quest Diagnostics and Fulgent Genetics 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 Quest Diagnostics with a short position of Fulgent Genetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quest Diagnostics and Fulgent Genetics.

Diversification Opportunities for Quest Diagnostics and Fulgent Genetics

-0.51

Correlation Coefficient

Quest Diagnostics  Fulgent Genetics

Excellent diversification

The 3 months correlation between Quest and Fulgent is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Quest Diagnostics Incorporated and Fulgent Genetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulgent Genetics and Quest Diagnostics 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 Quest Diagnostics Incorporated are associated (or correlated) with Fulgent Genetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulgent Genetics has no effect on the direction of Quest Diagnostics i.e., Quest Diagnostics and Fulgent Genetics go up and down completely randomly.

Pair Corralation between Quest Diagnostics and Fulgent Genetics

Considering the 90-day investment horizon Quest Diagnostics Incorporated is expected to generate 0.48 times more return on investment than Fulgent Genetics. However, Quest Diagnostics Incorporated is 2.1 times less risky than Fulgent Genetics. It trades about 0.06 of its potential returns per unit of risk. Fulgent Genetics is currently generating about -0.1 per unit of risk. If you would invest  15,620  in Quest Diagnostics Incorporated on August 31, 2024 and sell it today you would earn a total of  712.00  from holding Quest Diagnostics Incorporated or generate 4.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Quest Diagnostics Incorporated  vs.  Fulgent Genetics

Quest Diagnostics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Quest Diagnostics Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Quest Diagnostics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fulgent Genetics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fulgent Genetics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Quest Diagnostics and Fulgent Genetics

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

The idea behind Quest Diagnostics Incorporated and Fulgent Genetics 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.