Correlation Between Sera Prognostics and Natera

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

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

Diversification Opportunities for Sera Prognostics and Natera

-0.11

Correlation Coefficient

Sera Prognostics  Natera

Good diversification

The 3 months correlation between Sera and Natera is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sera Prognostics and Natera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natera Inc and Sera Prognostics 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 Sera Prognostics are associated (or correlated) with Natera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natera Inc has no effect on the direction of Sera Prognostics i.e., Sera Prognostics and Natera go up and down completely randomly.

Pair Corralation between Sera Prognostics and Natera

Given the investment horizon of 90 days Sera Prognostics is expected to generate 1.9 times more return on investment than Natera. However, Sera Prognostics is 1.9 times more volatile than Natera Inc. It trades about 0.37 of its potential returns per unit of risk. Natera Inc is currently generating about -0.02 per unit of risk. If you would invest  638.00  in Sera Prognostics on September 24, 2024 and sell it today you would earn a total of  240.00  from holding Sera Prognostics or generate 37.62% return on investment over 90 days.

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

Sera Prognostics  vs.  Natera Inc

Sera Prognostics

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sera Prognostics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Sera Prognostics sustained solid returns over the last few months and may actually be approaching a breakup point.

Natera Inc

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natera Inc are ranked lower than 11 (%) 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.

Pair Trading with Sera Prognostics and Natera

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

The idea behind Sera Prognostics and Natera 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.