Correlation Between Waste Management and BIONTECH
Can any of the company-specific risk be diversified away by investing in both Waste Management 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 Waste Management and BIONTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and BIONTECH SE DRN, you can compare the effects of market volatilities on Waste Management 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 Waste Management with a short position of BIONTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and BIONTECH.
Diversification Opportunities for Waste Management and BIONTECH
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Waste and BIONTECH is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and BIONTECH SE DRN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIONTECH SE DRN and Waste Management 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 Waste Management 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 DRN has no effect on the direction of Waste Management i.e., Waste Management and BIONTECH go up and down completely randomly.
Pair Corralation between Waste Management and BIONTECH
Assuming the 90 days trading horizon Waste Management is expected to generate 1.61 times less return on investment than BIONTECH. But when comparing it to its historical volatility, Waste Management is 2.64 times less risky than BIONTECH. It trades about 0.22 of its potential returns per unit of risk. BIONTECH SE DRN is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,105 in BIONTECH SE DRN on August 30, 2024 and sell it today you would earn a total of 397.00 from holding BIONTECH SE DRN or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. BIONTECH SE DRN
Performance |
| Timeline |
| Waste Management |
| BIONTECH SE DRN |
Waste Management and BIONTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and BIONTECH
The main advantage of trading using opposite Waste Management and BIONTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management 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.| Waste Management vs. SIMPAR SA | Waste Management vs. Pet Center Comrcio | Waste Management vs. Movida Participaes SA | Waste Management vs. Energisa SA |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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