Correlation Between Sotera Health and Caredx
Can any of the company-specific risk be diversified away by investing in both Sotera Health and Caredx 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 Sotera Health and Caredx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sotera Health Co and Caredx Inc, you can compare the effects of market volatilities on Sotera Health and Caredx 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 Sotera Health with a short position of Caredx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sotera Health and Caredx.
Diversification Opportunities for Sotera Health and Caredx
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sotera and Caredx is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sotera Health Co and Caredx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caredx Inc and Sotera 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 Sotera Health Co are associated (or correlated) with Caredx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caredx Inc has no effect on the direction of Sotera Health i.e., Sotera Health and Caredx go up and down completely randomly.
Pair Corralation between Sotera Health and Caredx
Considering the 90-day investment horizon Sotera Health is expected to generate 3.26 times less return on investment than Caredx. But when comparing it to its historical volatility, Sotera Health Co is 1.93 times less risky than Caredx. It trades about 0.07 of its potential returns per unit of risk. Caredx Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,352 in Caredx Inc on August 28, 2024 and sell it today you would earn a total of 1,059 from holding Caredx Inc or generate 78.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sotera Health Co vs. Caredx Inc
Performance |
| Timeline |
| Sotera Health |
| Caredx Inc |
Sotera Health and Caredx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sotera Health and Caredx
The main advantage of trading using opposite Sotera Health and Caredx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sotera Health position performs unexpectedly, Caredx 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 Caredx will offset losses from the drop in Caredx's long position.| Sotera Health vs. Qiagen NV | Sotera Health vs. Aclaris Therapeutics | Sotera Health vs. Neogen | Sotera Health vs. RadNet Inc |
| Caredx vs. Castle Biosciences | Caredx vs. Twist Bioscience Corp | Caredx vs. Biodesix | Caredx vs. Natera Inc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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