Correlation Between BioNTech and Viridian Therapeutics

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

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

Diversification Opportunities for BioNTech and Viridian Therapeutics

0.24

Correlation Coefficient

BioNTech  Viridian Therapeutics

Modest diversification

The 3 months correlation between BioNTech and Viridian is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Viridian Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viridian Therapeutics 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 Viridian Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viridian Therapeutics has no effect on the direction of BioNTech i.e., BioNTech and Viridian Therapeutics go up and down completely randomly.

Pair Corralation between BioNTech and Viridian Therapeutics

Assuming the 90 days trading horizon BioNTech SE is expected to generate 0.53 times more return on investment than Viridian Therapeutics. However, BioNTech SE is 1.88 times less risky than Viridian Therapeutics. It trades about -0.02 of its potential returns per unit of risk. Viridian Therapeutics is currently generating about -0.09 per unit of risk. If you would invest  11,781  in BioNTech SE on December 2, 2024 and sell it today you would lose (716.00) from holding BioNTech SE or give up 6.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BioNTech SE  vs.  Viridian Therapeutics

BioNTech SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioNTech SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, BioNTech is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Viridian Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viridian Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BioNTech and Viridian Therapeutics

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

The idea behind BioNTech SE and Viridian Therapeutics 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.