Correlation Between Natera and HEXPOL AB

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

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

Diversification Opportunities for Natera and HEXPOL AB

-0.56

Correlation Coefficient

Natera  HEXPOL AB

Excellent diversification

The 3 months correlation between Natera and HEXPOL is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Natera Inc and HEXPOL AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXPOL AB 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 HEXPOL AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXPOL AB has no effect on the direction of Natera i.e., Natera and HEXPOL AB go up and down completely randomly.

Pair Corralation between Natera and HEXPOL AB

Given the investment horizon of 90 days Natera Inc is expected to generate 1.78 times more return on investment than HEXPOL AB. However, Natera is 1.78 times more volatile than HEXPOL AB. It trades about 0.12 of its potential returns per unit of risk. HEXPOL AB is currently generating about -0.09 per unit of risk. If you would invest  12,695  in Natera Inc on September 28, 2024 and sell it today you would earn a total of  3,269  from holding Natera Inc or generate 25.75% return on investment over 90 days.

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

Natera Inc  vs.  HEXPOL AB

Natera Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natera Inc are ranked lower than 9 (%) 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.

HEXPOL AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEXPOL AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Natera and HEXPOL AB

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

The idea behind Natera Inc and HEXPOL AB 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.