Correlation Between BIONTECH and CVS Health

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

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

Diversification Opportunities for BIONTECH and CVS Health

-0.74

Correlation Coefficient

BIONTECH  CVS Health

Pay attention - limited upside

The 3 months correlation between BIONTECH and CVS is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding BIONTECH SE DRN and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 DRN are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of BIONTECH i.e., BIONTECH and CVS Health go up and down completely randomly.

Pair Corralation between BIONTECH and CVS Health

Assuming the 90 days trading horizon BIONTECH SE DRN is expected to under-perform the CVS Health. But the stock apears to be less risky and, when comparing its historical volatility, BIONTECH SE DRN is 1.03 times less risky than CVS Health. The stock trades about -0.14 of its potential returns per unit of risk. The CVS Health is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,662  in CVS Health on December 29, 2024 and sell it today you would earn a total of  1,196  from holding CVS Health or generate 44.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

BIONTECH SE DRN  vs.  CVS Health

BIONTECH SE DRN

Risk-Adjusted Performance

Very Weak

Over the last 90 days BIONTECH SE DRN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CVS Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CVS Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BIONTECH and CVS Health

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

The idea behind BIONTECH SE DRN and CVS Health 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.