Correlation Between Willow Biosciences and CLS Holdings

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Can any of the company-specific risk be diversified away by investing in both Willow Biosciences and CLS Holdings 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 Willow Biosciences and CLS Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Willow Biosciences and CLS Holdings USA, you can compare the effects of market volatilities on Willow Biosciences and CLS Holdings 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 Willow Biosciences with a short position of CLS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willow Biosciences and CLS Holdings.

Diversification Opportunities for Willow Biosciences and CLS Holdings

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Willow and CLS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Willow Biosciences and CLS Holdings USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLS Holdings USA and Willow 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 Willow Biosciences are associated (or correlated) with CLS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLS Holdings USA has no effect on the direction of Willow Biosciences i.e., Willow Biosciences and CLS Holdings go up and down completely randomly.

Pair Corralation between Willow Biosciences and CLS Holdings

Assuming the 90 days horizon Willow Biosciences is expected to generate 0.54 times more return on investment than CLS Holdings. However, Willow Biosciences is 1.84 times less risky than CLS Holdings. It trades about 0.31 of its potential returns per unit of risk. CLS Holdings USA is currently generating about 0.01 per unit of risk. If you would invest  3.90  in Willow Biosciences on October 21, 2024 and sell it today you would earn a total of  1.14  from holding Willow Biosciences or generate 29.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Willow Biosciences  vs.  CLS Holdings USA

 Performance 
       Timeline  
Willow Biosciences 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Willow Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
CLS Holdings USA 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in CLS Holdings USA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, CLS Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Willow Biosciences and CLS Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Willow Biosciences and CLS Holdings

The main advantage of trading using opposite Willow Biosciences and CLS Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willow Biosciences position performs unexpectedly, CLS Holdings 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 CLS Holdings will offset losses from the drop in CLS Holdings' long position.
The idea behind Willow Biosciences and CLS Holdings USA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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