Correlation Between Avient Corp and BioNTech

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

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

Diversification Opportunities for Avient Corp and BioNTech

0.22

Correlation Coefficient

Avient Corp  BioNTech

Modest diversification

The 3 months correlation between Avient and BioNTech is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Avient 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 Avient Corp are associated (or correlated) with BioNTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioNTech SE has no effect on the direction of Avient Corp i.e., Avient Corp and BioNTech go up and down completely randomly.

Pair Corralation between Avient Corp and BioNTech

Given the investment horizon of 90 days Avient Corp is expected to generate 2.98 times less return on investment than BioNTech. But when comparing it to its historical volatility, Avient Corp is 2.15 times less risky than BioNTech. It trades about 0.13 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  8,995  in BioNTech SE on March 2, 2024 and sell it today you would earn a total of  1,065  from holding BioNTech SE or generate 11.84% return on investment over 90 days.

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

Avient Corp  vs.  BioNTech SE

Avient Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avient Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Avient Corp may actually be approaching a critical reversion point that can send shares even higher in July 2024.

BioNTech SE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BioNTech may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Avient Corp and BioNTech

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

The idea behind Avient Corp and BioNTech SE 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.