Correlation Between Searchlight Solutions and Natera

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

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

Diversification Opportunities for Searchlight Solutions and Natera

0.0

Correlation Coefficient

Searchlight Solutions  Natera

Pay attention - limited upside

The 3 months correlation between Searchlight and Natera is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Searchlight Solutions and Natera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natera Inc and Searchlight Solutions 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 Searchlight Solutions 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 Searchlight Solutions i.e., Searchlight Solutions and Natera go up and down completely randomly.

Pair Corralation between Searchlight Solutions and Natera

If you would invest  5,501  in Natera Inc on September 23, 2024 and sell it today you would earn a total of  10,687  from holding Natera Inc or generate 194.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Searchlight Solutions  vs.  Natera Inc

Searchlight Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Searchlight Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Searchlight Solutions is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Natera Inc

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Searchlight Solutions and Natera

The main advantage of trading using opposite Searchlight Solutions and Natera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Searchlight Solutions 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 Searchlight Solutions 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.