Correlation Between Natera and Personalis

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

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

Diversification Opportunities for Natera and Personalis

0.72

Correlation Coefficient

Natera  Personalis

Poor diversification

The 3 months correlation between Natera and Personalis is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Natera Inc and Personalis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Personalis 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 Personalis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Personalis has no effect on the direction of Natera i.e., Natera and Personalis go up and down completely randomly.

Pair Corralation between Natera and Personalis

Given the investment horizon of 90 days Natera Inc is expected to generate 0.47 times more return on investment than Personalis. However, Natera Inc is 2.12 times less risky than Personalis. It trades about -0.04 of its potential returns per unit of risk. Personalis is currently generating about -0.11 per unit of risk. If you would invest  15,855  in Natera Inc on December 30, 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.  Personalis

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.

Personalis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Personalis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Natera and Personalis

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

The idea behind Natera Inc and Personalis 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.