Correlation Between Windtree Therapeutics and Homology Medicines

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

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

Diversification Opportunities for Windtree Therapeutics and Homology Medicines

0.1

Correlation Coefficient

Windtree Therapeutics  Homology Medicines

Average diversification

The 3 months correlation between Windtree and Homology is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Windtree Therapeutics and Homology Medicines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homology Medicines and Windtree Therapeutics 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 Windtree Therapeutics are associated (or correlated) with Homology Medicines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homology Medicines has no effect on the direction of Windtree Therapeutics i.e., Windtree Therapeutics and Homology Medicines go up and down completely randomly.

Pair Corralation between Windtree Therapeutics and Homology Medicines

Given the investment horizon of 90 days Windtree Therapeutics is expected to under-perform the Homology Medicines. In addition to that, Windtree Therapeutics is 2.44 times more volatile than Homology Medicines. It trades about -0.06 of its total potential returns per unit of risk. Homology Medicines is currently generating about -0.04 per unit of volatility. If you would invest  165.00  in Homology Medicines on September 30, 2024 and sell it today you would lose (56.00) from holding Homology Medicines or give up 33.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	27.36%
Values	Daily Returns

Windtree Therapeutics  vs.  Homology Medicines

Windtree Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Windtree Therapeutics 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Homology Medicines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Homology Medicines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Homology Medicines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Windtree Therapeutics and Homology Medicines

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

The idea behind Windtree Therapeutics and Homology Medicines 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.