Correlation Between Aegon NV and BioNTech

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

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

Diversification Opportunities for Aegon NV and BioNTech

0.37

Correlation Coefficient

Aegon NV  BioNTech

Weak diversification

The 3 months correlation between Aegon and BioNTech is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aegon NV ADR and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Aegon NV 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 Aegon NV ADR 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 Aegon NV i.e., Aegon NV and BioNTech go up and down completely randomly.

Pair Corralation between Aegon NV and BioNTech

Considering the 90-day investment horizon Aegon NV ADR is expected to generate 0.6 times more return on investment than BioNTech. However, Aegon NV ADR is 1.67 times less risky than BioNTech. It trades about 0.0 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.0 per unit of risk. If you would invest  634.00  in Aegon NV ADR on December 2, 2024 and sell it today you would lose (6.00) from holding Aegon NV ADR or give up 0.95% of portfolio value over 90 days.

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

Aegon NV ADR  vs.  BioNTech SE

Aegon NV ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aegon NV ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Aegon NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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. In spite of fairly strong basic indicators, BioNTech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aegon NV and BioNTech

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

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.