Correlation Between Pinnacle West and BioNTech

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

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

Diversification Opportunities for Pinnacle West and BioNTech

0.08

Correlation Coefficient

Pinnacle West  BioNTech

Significant diversification

The 3 months correlation between Pinnacle and BioNTech is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle West Capital and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Pinnacle West 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 Pinnacle West Capital 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 has no effect on the direction of Pinnacle West i.e., Pinnacle West and BioNTech go up and down completely randomly.

Pair Corralation between Pinnacle West and BioNTech

Assuming the 90 days trading horizon Pinnacle West Capital is expected to generate 0.36 times more return on investment than BioNTech. However, Pinnacle West Capital is 2.78 times less risky than BioNTech. It trades about -0.01 of its potential returns per unit of risk. BioNTech SE is currently generating about -0.02 per unit of risk. If you would invest  9,186  in Pinnacle West Capital on December 2, 2024 and sell it today you would lose (61.00) from holding Pinnacle West Capital or give up 0.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

Pinnacle West Capital  vs.  BioNTech SE

Pinnacle West Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pinnacle West Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pinnacle West is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Pinnacle West and BioNTech

The main advantage of trading using opposite Pinnacle West and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinnacle West 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.

The idea behind Pinnacle West Capital and BioNTech SE 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.