Correlation Between CareDx and Illumina

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

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

Diversification Opportunities for CareDx and Illumina

-0.2

Correlation Coefficient

CareDx  Illumina

Good diversification

The 3 months correlation between CareDx and Illumina is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CareDx Inc and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina and CareDx 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 CareDx Inc are associated (or correlated) with Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of CareDx i.e., CareDx and Illumina go up and down completely randomly.

Pair Corralation between CareDx and Illumina

Given the investment horizon of 90 days CareDx Inc is expected to under-perform the Illumina. In addition to that, CareDx is 2.17 times more volatile than Illumina. It trades about 0.0 of its total potential returns per unit of risk. Illumina is currently generating about 0.16 per unit of volatility. If you would invest  7,635  in Illumina on May 7, 2025 and sell it today you would earn a total of  2,141  from holding Illumina or generate 28.04% return on investment over 90 days.

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

CareDx Inc  vs.  Illumina

CareDx Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days CareDx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CareDx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Illumina

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Illumina are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Illumina displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CareDx and Illumina

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

The idea behind CareDx Inc and Illumina 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.