Correlation Between Natera and NeoGenomics

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

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

Diversification Opportunities for Natera and NeoGenomics

0.76

Correlation Coefficient

Natera  NeoGenomics

Poor diversification

The 3 months correlation between Natera and NeoGenomics is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Natera Inc and NeoGenomics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeoGenomics 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 NeoGenomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeoGenomics has no effect on the direction of Natera i.e., Natera and NeoGenomics go up and down completely randomly.

Pair Corralation between Natera and NeoGenomics

Given the investment horizon of 90 days Natera Inc is expected to generate 0.48 times more return on investment than NeoGenomics. However, Natera Inc is 2.07 times less risky than NeoGenomics. It trades about -0.04 of its potential returns per unit of risk. NeoGenomics is currently generating about -0.13 per unit of risk. If you would invest  15,855  in Natera Inc on December 29, 2024 and sell it today you would lose (1,461) from holding Natera Inc or give up 9.21% of portfolio value over 90 days.

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

Natera Inc  vs.  NeoGenomics

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.

NeoGenomics

Risk-Adjusted Performance

Very Weak

Over the last 90 days NeoGenomics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Natera and NeoGenomics

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

The idea behind Natera Inc and NeoGenomics 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.