Correlation Between Werewolf Therapeutics and Edgewise Therapeutics

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

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

Diversification Opportunities for Werewolf Therapeutics and Edgewise Therapeutics

0.23

Correlation Coefficient

Werewolf Therapeutics  Edgewise Therapeutics

Modest diversification

The 3 months correlation between Werewolf and Edgewise is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Werewolf Therapeutics and Edgewise Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewise Therapeutics and Werewolf 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 Werewolf Therapeutics are associated (or correlated) with Edgewise Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewise Therapeutics has no effect on the direction of Werewolf Therapeutics i.e., Werewolf Therapeutics and Edgewise Therapeutics go up and down completely randomly.

Pair Corralation between Werewolf Therapeutics and Edgewise Therapeutics

Given the investment horizon of 90 days Werewolf Therapeutics is expected to generate 5.95 times less return on investment than Edgewise Therapeutics. In addition to that, Werewolf Therapeutics is 1.01 times more volatile than Edgewise Therapeutics. It trades about 0.02 of its total potential returns per unit of risk. Edgewise Therapeutics is currently generating about 0.15 per unit of volatility. If you would invest  1,793  in Edgewise Therapeutics on September 4, 2024 and sell it today you would earn a total of  1,361  from holding Edgewise Therapeutics or generate 75.91% return on investment over 90 days.

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

Werewolf Therapeutics  vs.  Edgewise Therapeutics

Werewolf Therapeutics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Werewolf Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Werewolf Therapeutics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Edgewise Therapeutics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Edgewise Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Edgewise Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Werewolf Therapeutics and Edgewise Therapeutics

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

The idea behind Werewolf Therapeutics and Edgewise 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.