Correlation Between Arm Holdings and BioNTech
Can any of the company-specific risk be diversified away by investing in both Arm Holdings 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 Arm Holdings and BioNTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arm Holdings plc and BioNTech SE, you can compare the effects of market volatilities on Arm Holdings 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 Arm Holdings with a short position of BioNTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arm Holdings and BioNTech.
Diversification Opportunities for Arm Holdings and BioNTech
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arm and BioNTech is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Arm Holdings 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 Arm Holdings plc 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 Arm Holdings i.e., Arm Holdings and BioNTech go up and down completely randomly.
Pair Corralation between Arm Holdings and BioNTech
Considering the 90-day investment horizon Arm Holdings plc is expected to generate 2.1 times more return on investment than BioNTech. However, Arm Holdings is 2.1 times more volatile than BioNTech SE. It trades about 0.07 of its potential returns per unit of risk. BioNTech SE is currently generating about -0.02 per unit of risk. If you would invest 6,359 in Arm Holdings plc on September 3, 2024 and sell it today you would earn a total of 7,070 from holding Arm Holdings plc or generate 111.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 62.02% |
| Values | Daily Returns |
Arm Holdings plc vs. BioNTech SE
Performance |
| Timeline |
| Arm Holdings plc |
| BioNTech SE |
Arm Holdings and BioNTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arm Holdings and BioNTech
The main advantage of trading using opposite Arm Holdings and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arm Holdings 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.| Arm Holdings vs. Viemed Healthcare | Arm Holdings vs. Kontoor Brands | Arm Holdings vs. Cumberland Pharmaceuticals | Arm Holdings vs. Tencent Music Entertainment |
| BioNTech vs. Novavax | BioNTech vs. Ginkgo Bioworks Holdings | BioNTech vs. Crispr Therapeutics AG | BioNTech vs. Ocean Biomedical |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |