Correlation Between ITM Power and BioNTech
Can any of the company-specific risk be diversified away by investing in both ITM Power 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 ITM Power and BioNTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITM Power Plc and BioNTech SE, you can compare the effects of market volatilities on ITM Power 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 ITM Power with a short position of BioNTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITM Power and BioNTech.
Diversification Opportunities for ITM Power and BioNTech
Very good diversification
The 3 months correlation between ITM and BioNTech is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding ITM Power Plc and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and ITM Power 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 ITM Power 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 ITM Power i.e., ITM Power and BioNTech go up and down completely randomly.
Pair Corralation between ITM Power and BioNTech
Assuming the 90 days horizon ITM Power Plc is expected to under-perform the BioNTech. In addition to that, ITM Power is 1.5 times more volatile than BioNTech SE. It trades about -0.03 of its total potential returns per unit of risk. BioNTech SE is currently generating about 0.0 per unit of volatility. If you would invest 13,800 in BioNTech SE on September 3, 2024 and sell it today you would lose (2,550) from holding BioNTech SE or give up 18.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITM Power Plc vs. BioNTech SE
Performance |
| Timeline |
| ITM Power Plc |
| BioNTech SE |
ITM Power and BioNTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITM Power and BioNTech
The main advantage of trading using opposite ITM Power and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITM Power 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.| ITM Power vs. Hon Hai Precision | ITM Power vs. Samsung SDI Co | ITM Power vs. Murata Manufacturing Co | ITM Power vs. Mitsubishi Electric |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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