Correlation Between Sonnet Biotherapeutics and Windtree Therapeutics

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

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

Diversification Opportunities for Sonnet Biotherapeutics and Windtree Therapeutics

0.59

Correlation Coefficient

Sonnet Biotherapeutics  Windtree Therapeutics

Very weak diversification

The 3 months correlation between Sonnet and Windtree is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sonnet Biotherapeutics Holding and Windtree Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Windtree Therapeutics and Sonnet Biotherapeutics 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 Sonnet Biotherapeutics Holdings are associated (or correlated) with Windtree Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Windtree Therapeutics has no effect on the direction of Sonnet Biotherapeutics i.e., Sonnet Biotherapeutics and Windtree Therapeutics go up and down completely randomly.

Pair Corralation between Sonnet Biotherapeutics and Windtree Therapeutics

Given the investment horizon of 90 days Sonnet Biotherapeutics Holdings is expected to generate 0.59 times more return on investment than Windtree Therapeutics. However, Sonnet Biotherapeutics Holdings is 1.7 times less risky than Windtree Therapeutics. It trades about -0.01 of its potential returns per unit of risk. Windtree Therapeutics is currently generating about -0.33 per unit of risk. If you would invest  148.00  in Sonnet Biotherapeutics Holdings on December 29, 2024 and sell it today you would lose (17.00) from holding Sonnet Biotherapeutics Holdings or give up 11.49% of portfolio value over 90 days.

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

Sonnet Biotherapeutics Holding  vs.  Windtree Therapeutics

Sonnet Biotherapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sonnet Biotherapeutics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Sonnet Biotherapeutics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Windtree Therapeutics

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sonnet Biotherapeutics and Windtree Therapeutics

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

The idea behind Sonnet Biotherapeutics Holdings and Windtree 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.