Correlation Between Orthopediatrics Corp and Werewolf Therapeutics

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

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

Diversification Opportunities for Orthopediatrics Corp and Werewolf Therapeutics

-0.12

Correlation Coefficient

Orthopediatrics Corp  Werewolf Therapeutics

Good diversification

The 3 months correlation between Orthopediatrics and Werewolf is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Orthopediatrics Corp and Werewolf Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werewolf Therapeutics and Orthopediatrics Corp 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 Orthopediatrics Corp are associated (or correlated) with Werewolf Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Werewolf Therapeutics has no effect on the direction of Orthopediatrics Corp i.e., Orthopediatrics Corp and Werewolf Therapeutics go up and down completely randomly.

Pair Corralation between Orthopediatrics Corp and Werewolf Therapeutics

Given the investment horizon of 90 days Orthopediatrics Corp is expected to under-perform the Werewolf Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Orthopediatrics Corp is 2.47 times less risky than Werewolf Therapeutics. The stock trades about -0.01 of its potential returns per unit of risk. The Werewolf Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  95.00  in Werewolf Therapeutics on May 4, 2025 and sell it today you would earn a total of  21.00  from holding Werewolf Therapeutics or generate 22.11% return on investment over 90 days.

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

Orthopediatrics Corp  vs.  Werewolf Therapeutics

Orthopediatrics Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orthopediatrics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Orthopediatrics Corp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Werewolf Therapeutics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Werewolf Therapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Werewolf Therapeutics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orthopediatrics Corp and Werewolf Therapeutics

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

The idea behind Orthopediatrics Corp and Werewolf 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.