Correlation Between Natera and Thermo Fisher

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

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

Diversification Opportunities for Natera and Thermo Fisher

-0.78

Correlation Coefficient

Natera  Thermo Fisher

Pay attention - limited upside

The 3 months correlation between Natera and Thermo is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Natera Inc and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific 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 Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of Natera i.e., Natera and Thermo Fisher go up and down completely randomly.

Pair Corralation between Natera and Thermo Fisher

Given the investment horizon of 90 days Natera Inc is expected to under-perform the Thermo Fisher. In addition to that, Natera is 2.0 times more volatile than Thermo Fisher Scientific. It trades about -0.06 of its total potential returns per unit of risk. Thermo Fisher Scientific is currently generating about 0.12 per unit of volatility. If you would invest  51,260  in Thermo Fisher Scientific on September 27, 2024 and sell it today you would earn a total of  1,458  from holding Thermo Fisher Scientific or generate 2.84% return on investment over 90 days.

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

Natera Inc  vs.  Thermo Fisher Scientific

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.

Thermo Fisher Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thermo Fisher Scientific 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 primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Natera and Thermo Fisher

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

The idea behind Natera Inc and Thermo Fisher Scientific 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.