Correlation Between BioNTech and Vertex Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both BioNTech and Vertex Pharmaceuticals 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 BioNTech and Vertex Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioNTech SE and Vertex Pharmaceuticals Incorporated, you can compare the effects of market volatilities on BioNTech and Vertex Pharmaceuticals 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 BioNTech with a short position of Vertex Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and Vertex Pharmaceuticals.
Diversification Opportunities for BioNTech and Vertex Pharmaceuticals
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BioNTech and Vertex is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Vertex Pharmaceuticals Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertex Pharmaceuticals and BioNTech 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 BioNTech SE are associated (or correlated) with Vertex Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertex Pharmaceuticals has no effect on the direction of BioNTech i.e., BioNTech and Vertex Pharmaceuticals go up and down completely randomly.
Pair Corralation between BioNTech and Vertex Pharmaceuticals
Assuming the 90 days trading horizon BioNTech is expected to generate 3.67 times less return on investment than Vertex Pharmaceuticals. In addition to that, BioNTech is 1.64 times more volatile than Vertex Pharmaceuticals Incorporated. It trades about 0.01 of its total potential returns per unit of risk. Vertex Pharmaceuticals Incorporated is currently generating about 0.05 per unit of volatility. If you would invest 28,590 in Vertex Pharmaceuticals Incorporated on October 10, 2024 and sell it today you would earn a total of 10,525 from holding Vertex Pharmaceuticals Incorporated or generate 36.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BioNTech SE vs. Vertex Pharmaceuticals Incorpo
Performance |
| Timeline |
| BioNTech SE |
| Vertex Pharmaceuticals |
BioNTech and Vertex Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioNTech and Vertex Pharmaceuticals
The main advantage of trading using opposite BioNTech and Vertex Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, Vertex Pharmaceuticals 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 Vertex Pharmaceuticals will offset losses from the drop in Vertex Pharmaceuticals' long position.| BioNTech vs. Moderna | BioNTech vs. Nel ASA | BioNTech vs. BYD Company Limited | BioNTech vs. Powercell Sweden |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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