Correlation Between Dyadic International and Northwest Biotherapeutics

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

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

Diversification Opportunities for Dyadic International and Northwest Biotherapeutics

0.1

Correlation Coefficient

Dyadic International  Northwest Biotherapeutics

Average diversification

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

Pair Corralation between Dyadic International and Northwest Biotherapeutics

Given the investment horizon of 90 days Dyadic International is expected to under-perform the Northwest Biotherapeutics. In addition to that, Dyadic International is 1.09 times more volatile than Northwest Biotherapeutics. It trades about -0.09 of its total potential returns per unit of risk. Northwest Biotherapeutics is currently generating about -0.06 per unit of volatility. If you would invest  27.00  in Northwest Biotherapeutics on December 28, 2024 and sell it today you would lose (4.00) from holding Northwest Biotherapeutics or give up 14.81% of portfolio value over 90 days.

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

Dyadic International  vs.  Northwest Biotherapeutics

Dyadic International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dyadic International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Northwest Biotherapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Northwest Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Dyadic International and Northwest Biotherapeutics

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

The idea behind Dyadic International and Northwest Biotherapeutics 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.