Correlation Between Privia Health and GeneDx Holdings

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

By analyzing existing cross correlation between Privia Health Group and GeneDx Holdings Corp, you can compare the effects of market volatilities on Privia Health and GeneDx 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 Privia Health with a short position of GeneDx Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Privia Health and GeneDx Holdings.

Diversification Opportunities for Privia Health and GeneDx Holdings

0.42

Correlation Coefficient

Privia Health  GeneDx Holdings

Very weak diversification

The 3 months correlation between Privia and GeneDx is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Privia Health Group and GeneDx Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneDx Holdings Corp and Privia Health 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 Privia Health Group are associated (or correlated) with GeneDx Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneDx Holdings Corp has no effect on the direction of Privia Health i.e., Privia Health and GeneDx Holdings go up and down completely randomly.

Pair Corralation between Privia Health and GeneDx Holdings

Given the investment horizon of 90 days Privia Health is expected to generate 2.31 times less return on investment than GeneDx Holdings. But when comparing it to its historical volatility, Privia Health Group is 4.07 times less risky than GeneDx Holdings. It trades about 0.13 of its potential returns per unit of risk. GeneDx Holdings Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7,658  in GeneDx Holdings Corp on December 28, 2024 and sell it today you would earn a total of  1,562  from holding GeneDx Holdings Corp or generate 20.4% return on investment over 90 days.

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

Privia Health Group  vs.  GeneDx Holdings Corp

Privia Health Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Privia Health Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Privia Health sustained solid returns over the last few months and may actually be approaching a breakup point.

GeneDx Holdings Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GeneDx Holdings Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, GeneDx Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Privia Health and GeneDx Holdings

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

The idea behind Privia Health Group and GeneDx Holdings Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.