Correlation Between Fulgent Genetics and Natera

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

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

Diversification Opportunities for Fulgent Genetics and Natera

0.1

Correlation Coefficient

Fulgent Genetics  Natera

Average diversification

The 3 months correlation between Fulgent and Natera is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fulgent Genetics and Natera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natera Inc and Fulgent Genetics 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 Fulgent Genetics 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 Fulgent Genetics i.e., Fulgent Genetics and Natera go up and down completely randomly.

Pair Corralation between Fulgent Genetics and Natera

Given the investment horizon of 90 days Fulgent Genetics is expected to under-perform the Natera. But the stock apears to be less risky and, when comparing its historical volatility, Fulgent Genetics is 1.03 times less risky than Natera. The stock trades about -0.05 of its potential returns per unit of risk. The Natera Inc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  16,199  in Natera Inc on December 21, 2024 and sell it today you would lose (1,236) from holding Natera Inc or give up 7.63% of portfolio value over 90 days.

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

Fulgent Genetics  vs.  Natera Inc

Fulgent Genetics

Risk-Adjusted Performance

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 latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Natera Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Natera Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Natera is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fulgent Genetics and Natera

The main advantage of trading using opposite Fulgent Genetics and Natera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulgent Genetics 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 Fulgent Genetics 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.