Correlation Between GeneDx Holdings and TransMedics

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

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

Diversification Opportunities for GeneDx Holdings and TransMedics

0.49

Correlation Coefficient

GeneDx Holdings  TransMedics

Very weak diversification

The 3 months correlation between GeneDx and TransMedics is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding GeneDx Holdings Corp and TransMedics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransMedics Group and GeneDx Holdings 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 GeneDx Holdings Corp are associated (or correlated) with TransMedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransMedics Group has no effect on the direction of GeneDx Holdings i.e., GeneDx Holdings and TransMedics go up and down completely randomly.

Pair Corralation between GeneDx Holdings and TransMedics

Considering the 90-day investment horizon GeneDx Holdings Corp is expected to generate 2.0 times more return on investment than TransMedics. However, GeneDx Holdings is 2.0 times more volatile than TransMedics Group. It trades about 0.07 of its potential returns per unit of risk. TransMedics Group is currently generating about 0.08 per unit of risk. If you would invest  7,658  in GeneDx Holdings Corp on December 30, 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

GeneDx Holdings Corp  vs.  TransMedics Group

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.

TransMedics Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TransMedics Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, TransMedics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GeneDx Holdings and TransMedics

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

The idea behind GeneDx Holdings Corp and TransMedics Group 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 Stocks Directory module to find actively traded stocks across global markets.