Correlation Between Windtree Therapeutics and Stoke Therapeutics

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

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

Diversification Opportunities for Windtree Therapeutics and Stoke Therapeutics

0.05

Correlation Coefficient

Windtree Therapeutics  Stoke Therapeutics

Significant diversification

The 3 months correlation between Windtree and Stoke is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Windtree Therapeutics and Stoke Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoke Therapeutics 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 Stoke Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoke Therapeutics has no effect on the direction of Windtree Therapeutics i.e., Windtree Therapeutics and Stoke Therapeutics go up and down completely randomly.

Pair Corralation between Windtree Therapeutics and Stoke Therapeutics

Given the investment horizon of 90 days Windtree Therapeutics is expected to under-perform the Stoke Therapeutics. In addition to that, Windtree Therapeutics is 2.03 times more volatile than Stoke Therapeutics. It trades about -0.06 of its total potential returns per unit of risk. Stoke Therapeutics is currently generating about 0.04 per unit of volatility. If you would invest  827.00  in Stoke Therapeutics on September 30, 2024 and sell it today you would earn a total of  279.00  from holding Stoke Therapeutics or generate 33.74% return on investment over 90 days.

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

Windtree Therapeutics  vs.  Stoke Therapeutics

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.

Stoke Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stoke Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Stoke Therapeutics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Windtree Therapeutics and Stoke Therapeutics

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

The idea behind Windtree Therapeutics and Stoke Therapeutics 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.