Correlation Between Natera and Macys

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

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

Diversification Opportunities for Natera and Macys

0.56

Correlation Coefficient

Natera  Macys

Very weak diversification

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

Pair Corralation between Natera and Macys

Given the investment horizon of 90 days Natera Inc is expected to generate 1.5 times more return on investment than Macys. However, Natera is 1.5 times more volatile than Macys Inc. It trades about 0.14 of its potential returns per unit of risk. Macys Inc is currently generating about 0.07 per unit of risk. If you would invest  12,354  in Natera Inc on September 22, 2024 and sell it today you would earn a total of  3,834  from holding Natera Inc or generate 31.03% return on investment over 90 days.

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

Natera Inc  vs.  Macys Inc

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 uncertain basic indicators, Natera sustained solid returns over the last few months and may actually be approaching a breakup point.

Macys Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Macys may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Natera and Macys

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

The idea behind Natera Inc and Macys 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.