Correlation Between Editas Medicine and CareDx

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

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

Diversification Opportunities for Editas Medicine and CareDx

-0.14

Correlation Coefficient

Editas Medicine  CareDx

Good diversification

The 3 months correlation between Editas and CareDx is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Editas Medicine and CareDx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareDx Inc and Editas Medicine 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 Editas Medicine 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 Editas Medicine i.e., Editas Medicine and CareDx go up and down completely randomly.

Pair Corralation between Editas Medicine and CareDx

Given the investment horizon of 90 days Editas Medicine is expected to generate 1.03 times more return on investment than CareDx. However, Editas Medicine is 1.03 times more volatile than CareDx Inc. It trades about 0.19 of its potential returns per unit of risk. CareDx Inc is currently generating about 0.0 per unit of risk. If you would invest  133.00  in Editas Medicine on May 6, 2025 and sell it today you would earn a total of  111.00  from holding Editas Medicine or generate 83.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Editas Medicine  vs.  CareDx Inc

Editas Medicine

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Editas Medicine are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, Editas Medicine unveiled solid returns over the last few months and may actually be approaching a breakup point.

CareDx Inc

Risk-Adjusted Performance

Very Weak

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.

Pair Trading with Editas Medicine and CareDx

The main advantage of trading using opposite Editas Medicine and CareDx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Editas Medicine 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.

The idea behind Editas Medicine and CareDx 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.