Correlation Between BIONTECH and McDonalds
Can any of the company-specific risk be diversified away by investing in both BIONTECH and McDonalds 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 McDonalds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BIONTECH SE DRN and McDonalds, you can compare the effects of market volatilities on BIONTECH and McDonalds 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 McDonalds. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIONTECH and McDonalds.
Diversification Opportunities for BIONTECH and McDonalds
Poor diversification
The 3 months correlation between BIONTECH and McDonalds is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding BIONTECH SE DRN and McDonalds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McDonalds 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 DRN are associated (or correlated) with McDonalds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McDonalds has no effect on the direction of BIONTECH i.e., BIONTECH and McDonalds go up and down completely randomly.
Pair Corralation between BIONTECH and McDonalds
Assuming the 90 days trading horizon BIONTECH is expected to generate 3.59 times less return on investment than McDonalds. In addition to that, BIONTECH is 2.05 times more volatile than McDonalds. It trades about 0.01 of its total potential returns per unit of risk. McDonalds is currently generating about 0.05 per unit of volatility. If you would invest 6,495 in McDonalds on October 22, 2024 and sell it today you would earn a total of 2,015 from holding McDonalds or generate 31.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
BIONTECH SE DRN vs. McDonalds
Performance |
| Timeline |
| BIONTECH SE DRN |
| McDonalds |
BIONTECH and McDonalds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BIONTECH and McDonalds
The main advantage of trading using opposite BIONTECH and McDonalds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BIONTECH position performs unexpectedly, McDonalds 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 McDonalds will offset losses from the drop in McDonalds' long position.| BIONTECH vs. Hospital Mater Dei | BIONTECH vs. Universal Health Services, | BIONTECH vs. Clover Health Investments, | BIONTECH vs. Cardinal Health, |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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