Correlation Between Pfizer and BioNTech
Can any of the company-specific risk be diversified away by investing in both Pfizer 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 Pfizer and BioNTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and BioNTech SE, you can compare the effects of market volatilities on Pfizer 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 Pfizer with a short position of BioNTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and BioNTech.
Diversification Opportunities for Pfizer and BioNTech
Very poor diversification
The 3 months correlation between Pfizer and BioNTech is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Pfizer 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 Pfizer Inc 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 Pfizer i.e., Pfizer and BioNTech go up and down completely randomly.
Pair Corralation between Pfizer and BioNTech
Considering the 90-day investment horizon Pfizer is expected to generate 1.17 times less return on investment than BioNTech. But when comparing it to its historical volatility, Pfizer Inc is 2.1 times less risky than BioNTech. It trades about 0.19 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 9,335 in BioNTech SE on March 7, 2024 and sell it today you would earn a total of 613.00 from holding BioNTech SE or generate 6.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Pfizer Inc vs. BioNTech SE
Performance |
Timeline |
Pfizer Inc |
BioNTech SE |
Pfizer and BioNTech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pfizer and BioNTech
The main advantage of trading using opposite Pfizer and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer 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.Pfizer vs. ABIVAX Socit Anonyme | Pfizer vs. Franklin Strategic Mortgage | Pfizer vs. Morningstar Unconstrained Allocation | Pfizer vs. Via Renewables |
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Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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