Correlation Between Armada Hflr and Willow Biosciences

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

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

Diversification Opportunities for Armada Hflr and Willow Biosciences

0.24

Correlation Coefficient

Armada Hflr  Willow Biosciences

Modest diversification

The 3 months correlation between Armada and Willow is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Willow Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willow Biosciences and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Willow Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willow Biosciences has no effect on the direction of Armada Hflr i.e., Armada Hflr and Willow Biosciences go up and down completely randomly.

Pair Corralation between Armada Hflr and Willow Biosciences

Considering the 90-day investment horizon Armada Hflr is expected to generate 4.36 times less return on investment than Willow Biosciences. But when comparing it to its historical volatility, Armada Hflr Pr is 4.19 times less risky than Willow Biosciences. It trades about 0.02 of its potential returns per unit of risk. Willow Biosciences is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Willow Biosciences on September 12, 2024 and sell it today you would lose (3.50) from holding Willow Biosciences or give up 31.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Armada Hflr Pr  vs.  Willow Biosciences

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Willow Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Willow Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Armada Hflr and Willow Biosciences

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

The idea behind Armada Hflr Pr and Willow Biosciences 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.