Correlation Between Natera and IQVIA Holdings

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

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

Diversification Opportunities for Natera and IQVIA Holdings

-0.79

Correlation Coefficient

Natera  IQVIA Holdings

Pay attention - limited upside

The 3 months correlation between Natera and IQVIA is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Natera Inc and IQVIA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQVIA Holdings 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 IQVIA Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQVIA Holdings has no effect on the direction of Natera i.e., Natera and IQVIA Holdings go up and down completely randomly.

Pair Corralation between Natera and IQVIA Holdings

Given the investment horizon of 90 days Natera Inc is expected to generate 1.76 times more return on investment than IQVIA Holdings. However, Natera is 1.76 times more volatile than IQVIA Holdings. It trades about 0.0 of its potential returns per unit of risk. IQVIA Holdings is currently generating about -0.06 per unit of risk. If you would invest  16,439  in Natera Inc on September 25, 2024 and sell it today you would lose (124.50) from holding Natera Inc or give up 0.76% of portfolio value over 90 days.

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

Natera Inc  vs.  IQVIA Holdings

Natera Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natera Inc are ranked lower than 10 (%) 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.

IQVIA Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IQVIA Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Natera and IQVIA Holdings

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

The idea behind Natera Inc and IQVIA Holdings 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.