Correlation Between Summit Materials and BioNTech

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Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and BioNTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and BioNTech SE, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of BioNTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and BioNTech.

Diversification Opportunities for Summit Materials and BioNTech

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Summit and BioNTech is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and BioNTech go up and down completely randomly.

Pair Corralation between Summit Materials and BioNTech

Considering the 90-day investment horizon Summit Materials is expected to generate 0.81 times more return on investment than BioNTech. However, Summit Materials is 1.23 times less risky than BioNTech. It trades about 0.06 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.02 per unit of risk. If you would invest  3,454  in Summit Materials on August 31, 2024 and sell it today you would earn a total of  1,640  from holding Summit Materials or generate 47.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Summit Materials  vs.  BioNTech SE

 Performance 
       Timeline  
Summit Materials 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.
BioNTech SE 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, BioNTech showed solid returns over the last few months and may actually be approaching a breakup point.

Summit Materials and BioNTech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Summit Materials and BioNTech

The main advantage of trading using opposite Summit Materials and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.
The idea behind Summit Materials and BioNTech SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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