Correlation Between Natera and Codexis
Can any of the company-specific risk be diversified away by investing in both Natera and Codexis 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 Codexis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natera Inc and Codexis, you can compare the effects of market volatilities on Natera and Codexis 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 Codexis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natera and Codexis.
Diversification Opportunities for Natera and Codexis
Very poor diversification
The 3 months correlation between Natera and Codexis is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Natera Inc and Codexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codexis 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 Codexis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codexis has no effect on the direction of Natera i.e., Natera and Codexis go up and down completely randomly.
Pair Corralation between Natera and Codexis
Given the investment horizon of 90 days Natera Inc is expected to generate 0.52 times more return on investment than Codexis. However, Natera Inc is 1.93 times less risky than Codexis. It trades about 0.11 of its potential returns per unit of risk. Codexis is currently generating about 0.04 per unit of risk. If you would invest 5,293 in Natera Inc on September 25, 2024 and sell it today you would earn a total of 11,022 from holding Natera Inc or generate 208.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natera Inc vs. Codexis
Performance |
| Timeline |
| Natera Inc |
| Codexis |
Natera and Codexis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natera and Codexis
The main advantage of trading using opposite Natera and Codexis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natera position performs unexpectedly, Codexis 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 Codexis will offset losses from the drop in Codexis' long position.| Natera vs. Fate Therapeutics | Natera vs. Caribou Biosciences | Natera vs. Arcus Biosciences | Natera vs. Karyopharm Therapeutics |
| Codexis vs. Twist Bioscience Corp | Codexis vs. Natera Inc | Codexis vs. Guardant Health | Codexis vs. Castle Biosciences |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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