Correlation Between Natera and Axonics Modulation
Can any of the company-specific risk be diversified away by investing in both Natera and Axonics Modulation 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 Natera and Axonics Modulation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natera Inc and Axonics Modulation Technologies, you can compare the effects of market volatilities on Natera and Axonics Modulation 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 Natera with a short position of Axonics Modulation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natera and Axonics Modulation.
Diversification Opportunities for Natera and Axonics Modulation
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Natera and Axonics is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Natera Inc and Axonics Modulation Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axonics Modulation and Natera 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 Natera Inc are associated (or correlated) with Axonics Modulation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axonics Modulation has no effect on the direction of Natera i.e., Natera and Axonics Modulation go up and down completely randomly.
Pair Corralation between Natera and Axonics Modulation
Given the investment horizon of 90 days Natera Inc is expected to generate 16.68 times more return on investment than Axonics Modulation. However, Natera is 16.68 times more volatile than Axonics Modulation Technologies. It trades about 0.28 of its potential returns per unit of risk. Axonics Modulation Technologies is currently generating about 0.37 per unit of risk. If you would invest 13,039 in Natera Inc on September 8, 2024 and sell it today you would earn a total of 4,126 from holding Natera Inc or generate 31.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 31.82% |
Values | Daily Returns |
Natera Inc vs. Axonics Modulation Technologie
Performance |
Timeline |
Natera Inc |
Axonics Modulation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Natera and Axonics Modulation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Natera and Axonics Modulation
The main advantage of trading using opposite Natera and Axonics Modulation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natera position performs unexpectedly, Axonics Modulation 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 Axonics Modulation will offset losses from the drop in Axonics Modulation's long position.The idea behind Natera Inc and Axonics Modulation Technologies 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.Axonics Modulation vs. Orthofix Medical | Axonics Modulation vs. Glaukos Corp | Axonics Modulation vs. Bruker | Axonics Modulation vs. Integer Holdings Corp |
Check out your portfolio center.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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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