Correlation Between Visa and BioNTech
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and BioNTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and BioNTech SE, you can compare the effects of market volatilities on Visa 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 Visa with a short position of BioNTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and BioNTech.
Diversification Opportunities for Visa and BioNTech
Significant diversification
The 3 months correlation between Visa and BioNTech is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Visa 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 Visa Class A 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 Visa i.e., Visa and BioNTech go up and down completely randomly.
Pair Corralation between Visa and BioNTech
Taking into account the 90-day investment horizon Visa is expected to generate 1.17 times less return on investment than BioNTech. But when comparing it to its historical volatility, Visa Class A is 2.73 times less risky than BioNTech. It trades about 0.09 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,929 in BioNTech SE on August 29, 2024 and sell it today you would earn a total of 1,986 from holding BioNTech SE or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.42% |
| Values | Daily Returns |
Visa Class A vs. BioNTech SE
Performance |
| Timeline |
| Visa Class A |
| BioNTech SE |
Visa and BioNTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and BioNTech
The main advantage of trading using opposite Visa and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| BioNTech vs. Auction Technology Group | BioNTech vs. Ameriprise Financial | BioNTech vs. National Bank of | BioNTech vs. Take Two Interactive Software |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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