Correlation Between BioNTech and TechnipFMC PLC

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

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

Diversification Opportunities for BioNTech and TechnipFMC PLC

0.16

Correlation Coefficient

BioNTech  TechnipFMC PLC

Average diversification

The 3 months correlation between BioNTech and TechnipFMC is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and TechnipFMC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC PLC 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 TechnipFMC PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnipFMC PLC has no effect on the direction of BioNTech i.e., BioNTech and TechnipFMC PLC go up and down completely randomly.

Pair Corralation between BioNTech and TechnipFMC PLC

Assuming the 90 days trading horizon BioNTech is expected to generate 116.72 times less return on investment than TechnipFMC PLC. In addition to that, BioNTech is 1.55 times more volatile than TechnipFMC PLC. It trades about 0.0 of its total potential returns per unit of risk. TechnipFMC PLC is currently generating about 0.15 per unit of volatility. If you would invest  2,346  in TechnipFMC PLC on September 29, 2024 and sell it today you would earn a total of  438.00  from holding TechnipFMC PLC or generate 18.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

BioNTech SE  vs.  TechnipFMC PLC

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. Despite quite persistent essential indicators, BioNTech is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

TechnipFMC PLC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TechnipFMC PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TechnipFMC PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BioNTech and TechnipFMC PLC

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

The idea behind BioNTech SE and TechnipFMC PLC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.