Correlation Between BioNTech and Novavax
Can any of the company-specific risk be diversified away by investing in both BioNTech and Novavax 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 Novavax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioNTech SE and Novavax, you can compare the effects of market volatilities on BioNTech and Novavax 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 Novavax. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and Novavax.
Diversification Opportunities for BioNTech and Novavax
Poor diversification
The 3 months correlation between BioNTech and Novavax is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Novavax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novavax 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 Novavax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novavax has no effect on the direction of BioNTech i.e., BioNTech and Novavax go up and down completely randomly.
Pair Corralation between BioNTech and Novavax
Given the investment horizon of 90 days BioNTech SE is expected to generate 0.55 times more return on investment than Novavax. However, BioNTech SE is 1.8 times less risky than Novavax. It trades about 0.02 of its potential returns per unit of risk. Novavax is currently generating about -0.05 per unit of risk. If you would invest 11,993 in BioNTech SE on October 31, 2024 and sell it today you would earn a total of 123.00 from holding BioNTech SE or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BioNTech SE vs. Novavax
Performance |
| Timeline |
| BioNTech SE |
| Novavax |
BioNTech and Novavax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioNTech and Novavax
The main advantage of trading using opposite BioNTech and Novavax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, Novavax 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 Novavax will offset losses from the drop in Novavax's long position.| 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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