Correlation Between Willow Biosciences and Entourage Health

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

By analyzing existing cross correlation between Willow Biosciences and Entourage Health Corp, you can compare the effects of market volatilities on Willow Biosciences and Entourage Health 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 Entourage Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Willow Biosciences and Entourage Health.

Diversification Opportunities for Willow Biosciences and Entourage Health

0.54

Correlation Coefficient

Willow Biosciences  Entourage Health

Very weak diversification

The 3 months correlation between Willow and Entourage is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Willow Biosciences and Entourage Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entourage Health Corp 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 Entourage Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entourage Health Corp has no effect on the direction of Willow Biosciences i.e., Willow Biosciences and Entourage Health go up and down completely randomly.

Pair Corralation between Willow Biosciences and Entourage Health

Assuming the 90 days horizon Willow Biosciences is expected to under-perform the Entourage Health. But the otc stock apears to be less risky and, when comparing its historical volatility, Willow Biosciences is 3.23 times less risky than Entourage Health. The otc stock trades about -0.04 of its potential returns per unit of risk. The Entourage Health Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.87  in Entourage Health Corp on September 12, 2024 and sell it today you would lose (0.09) from holding Entourage Health Corp or give up 10.34% of portfolio value over 90 days.

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

Willow Biosciences  vs.  Entourage Health Corp

Willow Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Entourage Health Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Entourage Health Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Entourage Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Willow Biosciences and Entourage Health

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

The idea behind Willow Biosciences and Entourage Health Corp 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.