Correlation Between BioNTech and Discover Financial
Can any of the company-specific risk be diversified away by investing in both BioNTech and Discover Financial 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 Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioNTech SE and Discover Financial Services, you can compare the effects of market volatilities on BioNTech and Discover Financial 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 Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and Discover Financial.
Diversification Opportunities for BioNTech and Discover Financial
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between BioNTech and Discover is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial 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 Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of BioNTech i.e., BioNTech and Discover Financial go up and down completely randomly.
Pair Corralation between BioNTech and Discover Financial
Given the investment horizon of 90 days BioNTech SE is expected to under-perform the Discover Financial. In addition to that, BioNTech is 1.09 times more volatile than Discover Financial Services. It trades about -0.02 of its total potential returns per unit of risk. Discover Financial Services is currently generating about 0.06 per unit of volatility. If you would invest 9,856 in Discover Financial Services on August 26, 2024 and sell it today you would earn a total of 8,073 from holding Discover Financial Services or generate 81.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BioNTech SE vs. Discover Financial Services
Performance |
| Timeline |
| BioNTech SE |
| Discover Financial |
BioNTech and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioNTech and Discover Financial
The main advantage of trading using opposite BioNTech and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, Discover Financial 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 Discover Financial will offset losses from the drop in Discover Financial's long position.| BioNTech vs. Novavax | BioNTech vs. Ginkgo Bioworks Holdings | BioNTech vs. Crispr Therapeutics AG | BioNTech vs. Ocean Biomedical |
| Discover Financial vs. Ally Financial | Discover Financial vs. Synchrony Financial | Discover Financial vs. Western Union Co | Discover Financial vs. Bread Financial Holdings |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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