Correlation Between NFL Biosciences and Winfarm

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

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

Diversification Opportunities for NFL Biosciences and Winfarm

0.24

Correlation Coefficient

NFL Biosciences  Winfarm

Modest diversification

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

Pair Corralation between NFL Biosciences and Winfarm

Assuming the 90 days trading horizon NFL Biosciences SAS is expected to generate 1.35 times more return on investment than Winfarm. However, NFL Biosciences is 1.35 times more volatile than Winfarm. It trades about -0.01 of its potential returns per unit of risk. Winfarm is currently generating about -0.12 per unit of risk. If you would invest  196.00  in NFL Biosciences SAS on October 1, 2024 and sell it today you would lose (11.00) from holding NFL Biosciences SAS or give up 5.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

NFL Biosciences SAS  vs.  Winfarm

NFL Biosciences SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NFL Biosciences SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, NFL Biosciences is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Winfarm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Winfarm has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NFL Biosciences and Winfarm

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

The idea behind NFL Biosciences SAS and Winfarm 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.