Correlation Between Raytheon Technologies and BioNTech

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

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

Diversification Opportunities for Raytheon Technologies and BioNTech

0.07

Correlation Coefficient

Raytheon Technologies  BioNTech

Significant diversification

The 3 months correlation between Raytheon and BioNTech is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies Corp and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Raytheon Technologies 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 Raytheon Technologies Corp 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 Raytheon Technologies i.e., Raytheon Technologies and BioNTech go up and down completely randomly.

Pair Corralation between Raytheon Technologies and BioNTech

Assuming the 90 days trading horizon Raytheon Technologies Corp is expected to under-perform the BioNTech. But the stock apears to be less risky and, when comparing its historical volatility, Raytheon Technologies Corp is 2.63 times less risky than BioNTech. The stock trades about -0.03 of its potential returns per unit of risk. The BioNTech SE is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  11,806  in BioNTech SE on September 29, 2024 and sell it today you would lose (341.00) from holding BioNTech SE or give up 2.89% of portfolio value over 90 days.

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

Raytheon Technologies Corp  vs.  BioNTech SE

Raytheon Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raytheon Technologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Raytheon Technologies 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

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.

Pair Trading with Raytheon Technologies and BioNTech

The main advantage of trading using opposite Raytheon Technologies and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies 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 Raytheon Technologies Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.