Correlation Between DarioHealth Corp and Natera

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

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

Diversification Opportunities for DarioHealth Corp and Natera

-0.86

Correlation Coefficient

DarioHealth Corp  Natera

Pay attention - limited upside

The 3 months correlation between DarioHealth and Natera is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding DarioHealth Corp and Natera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natera Inc and DarioHealth Corp 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 DarioHealth Corp 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 DarioHealth Corp i.e., DarioHealth Corp and Natera go up and down completely randomly.

Pair Corralation between DarioHealth Corp and Natera

Given the investment horizon of 90 days DarioHealth Corp is expected to generate 2.78 times more return on investment than Natera. However, DarioHealth Corp is 2.78 times more volatile than Natera Inc. It trades about 0.1 of its potential returns per unit of risk. Natera Inc is currently generating about -0.02 per unit of risk. If you would invest  73.00  in DarioHealth Corp on September 24, 2024 and sell it today you would earn a total of  7.00  from holding DarioHealth Corp or generate 9.59% return on investment over 90 days.

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

DarioHealth Corp  vs.  Natera Inc

DarioHealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DarioHealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Natera Inc

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natera Inc are ranked lower than 11 (%) 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 DarioHealth Corp and Natera

The main advantage of trading using opposite DarioHealth Corp and Natera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DarioHealth Corp 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 DarioHealth Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.