Correlation Between NRG Energy and BioNTech
Can any of the company-specific risk be diversified away by investing in both NRG Energy 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 NRG Energy and BioNTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and BioNTech SE, you can compare the effects of market volatilities on NRG Energy 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 NRG Energy with a short position of BioNTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and BioNTech.
Diversification Opportunities for NRG Energy and BioNTech
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NRG and BioNTech is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and NRG Energy 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 NRG Energy 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 NRG Energy i.e., NRG Energy and BioNTech go up and down completely randomly.
Pair Corralation between NRG Energy and BioNTech
Considering the 90-day investment horizon NRG Energy is expected to generate 1.01 times more return on investment than BioNTech. However, NRG Energy is 1.01 times more volatile than BioNTech SE. It trades about 0.05 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.02 per unit of risk. If you would invest 7,152 in NRG Energy on January 10, 2025 and sell it today you would earn a total of 2,122 from holding NRG Energy or generate 29.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NRG Energy vs. BioNTech SE
Performance |
| Timeline |
| NRG Energy |
| BioNTech SE |
NRG Energy and BioNTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRG Energy and BioNTech
The main advantage of trading using opposite NRG Energy and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy 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.| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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