Correlation Between BioNTech and Philip Morris

Can any of the company-specific risk be diversified away by investing in both BioNTech and Philip Morris 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 BioNTech and Philip Morris into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BioNTech SE and Philip Morris International, you can compare the effects of market volatilities on BioNTech and Philip Morris 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 BioNTech with a short position of Philip Morris. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and Philip Morris.

Diversification Opportunities for BioNTech and Philip Morris

-0.32

Correlation Coefficient

BioNTech  Philip Morris

Very good diversification

The 3 months correlation between BioNTech and Philip is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Philip Morris International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Philip Morris Intern and BioNTech 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 BioNTech SE are associated (or correlated) with Philip Morris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Philip Morris Intern has no effect on the direction of BioNTech i.e., BioNTech and Philip Morris go up and down completely randomly.

Pair Corralation between BioNTech and Philip Morris

Given the investment horizon of 90 days BioNTech is expected to generate 3.04 times less return on investment than Philip Morris. In addition to that, BioNTech is 1.53 times more volatile than Philip Morris International. It trades about 0.01 of its total potential returns per unit of risk. Philip Morris International is currently generating about 0.05 per unit of volatility. If you would invest  11,945  in Philip Morris International on September 20, 2024 and sell it today you would earn a total of  510.00  from holding Philip Morris International or generate 4.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BioNTech SE  vs.  Philip Morris International

BioNTech SE

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days BioNTech SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, BioNTech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Philip Morris Intern

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Philip Morris International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Philip Morris is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BioNTech and Philip Morris

The main advantage of trading using opposite BioNTech and Philip Morris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioNTech position performs unexpectedly, Philip Morris 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 Philip Morris will offset losses from the drop in Philip Morris' long position.

The idea behind BioNTech SE and Philip Morris International 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.