Correlation Between BioNTech and CITGO

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

By analyzing existing cross correlation between BioNTech SE and CITGO Petroleum 7, you can compare the effects of market volatilities on BioNTech and CITGO 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 CITGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioNTech and CITGO.

Diversification Opportunities for BioNTech and CITGO

0.02

Correlation Coefficient

BioNTech  CITGO

Significant diversification

The 3 months correlation between BioNTech and CITGO is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and CITGO Petroleum 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITGO Petroleum 7 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 CITGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITGO Petroleum 7 has no effect on the direction of BioNTech i.e., BioNTech and CITGO go up and down completely randomly.

Pair Corralation between BioNTech and CITGO

Given the investment horizon of 90 days BioNTech SE is expected to under-perform the CITGO. In addition to that, BioNTech is 17.02 times more volatile than CITGO Petroleum 7. It trades about -0.12 of its total potential returns per unit of risk. CITGO Petroleum 7 is currently generating about -0.07 per unit of volatility. If you would invest  10,013  in CITGO Petroleum 7 on September 24, 2024 and sell it today you would lose (15.00) from holding CITGO Petroleum 7 or give up 0.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

BioNTech SE  vs.  CITGO Petroleum 7

BioNTech SE

Risk-Adjusted Performance

0 of 100

Very 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 latest stock price disturbance, may contribute to short-term losses for the investors.

CITGO Petroleum 7

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITGO Petroleum 7 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CITGO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BioNTech and CITGO

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

The idea behind BioNTech SE and CITGO Petroleum 7 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.

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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.