Correlation Between BioNTech and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both BioNTech and Diageo PLC 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 Diageo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioNTech SE and Diageo PLC ADR, you can compare the effects of market volatilities on BioNTech and Diageo PLC 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 Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and Diageo PLC.
Diversification Opportunities for BioNTech and Diageo PLC
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BioNTech and Diageo is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR 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 Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of BioNTech i.e., BioNTech and Diageo PLC go up and down completely randomly.
Pair Corralation between BioNTech and Diageo PLC
Given the investment horizon of 90 days BioNTech SE is expected to generate 1.88 times more return on investment than Diageo PLC. However, BioNTech is 1.88 times more volatile than Diageo PLC ADR. It trades about -0.02 of its potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.05 per unit of risk. If you would invest 16,662 in BioNTech SE on September 2, 2024 and sell it today you would lose (4,823) from holding BioNTech SE or give up 28.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BioNTech SE vs. Diageo PLC ADR
Performance |
| Timeline |
| BioNTech SE |
| Diageo PLC ADR |
BioNTech and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioNTech and Diageo PLC
The main advantage of trading using opposite BioNTech and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| BioNTech vs. Novavax | BioNTech vs. Ginkgo Bioworks Holdings | BioNTech vs. Crispr Therapeutics AG | BioNTech vs. Ocean Biomedical |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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