Correlation Between Windtree Therapeutics and Novartis

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

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

Diversification Opportunities for Windtree Therapeutics and Novartis

-0.8

Correlation Coefficient

Windtree Therapeutics  Novartis

Pay attention - limited upside

The 3 months correlation between Windtree and Novartis is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Windtree Therapeutics and Novartis AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novartis AG ADR 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 Novartis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novartis AG ADR has no effect on the direction of Windtree Therapeutics i.e., Windtree Therapeutics and Novartis go up and down completely randomly.

Pair Corralation between Windtree Therapeutics and Novartis

Given the investment horizon of 90 days Windtree Therapeutics is expected to under-perform the Novartis. In addition to that, Windtree Therapeutics is 4.71 times more volatile than Novartis AG ADR. It trades about -0.31 of its total potential returns per unit of risk. Novartis AG ADR is currently generating about 0.13 per unit of volatility. If you would invest  10,284  in Novartis AG ADR on March 20, 2024 and sell it today you would earn a total of  234.00  from holding Novartis AG ADR or generate 2.28% return on investment over 90 days.

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

Windtree Therapeutics  vs.  Novartis AG ADR

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 inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Novartis AG ADR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Novartis AG ADR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Novartis may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Windtree Therapeutics and Novartis

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

The idea behind Windtree Therapeutics and Novartis AG ADR 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.