Correlation Between Fonar and Natera

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

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

Diversification Opportunities for Fonar and Natera

0.84

Correlation Coefficient

Fonar  Natera

Very poor diversification

The 3 months correlation between Fonar and Natera is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fonar and Natera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natera Inc and Fonar 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 Fonar 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 Fonar i.e., Fonar and Natera go up and down completely randomly.

Pair Corralation between Fonar and Natera

Given the investment horizon of 90 days Fonar is expected to generate 0.66 times more return on investment than Natera. However, Fonar is 1.52 times less risky than Natera. It trades about -0.06 of its potential returns per unit of risk. Natera Inc is currently generating about -0.04 per unit of risk. If you would invest  1,498  in Fonar on December 28, 2024 and sell it today you would lose (108.00) from holding Fonar or give up 7.21% of portfolio value over 90 days.

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

Fonar  vs.  Natera Inc

Fonar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fonar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail 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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Fonar and Natera

The main advantage of trading using opposite Fonar and Natera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fonar 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 Fonar 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.