Correlation Between Bavarian Nordic and Fundamental Invest

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

By analyzing existing cross correlation between Bavarian Nordic and Fundamental Invest Stock, you can compare the effects of market volatilities on Bavarian Nordic and Fundamental Invest 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 Bavarian Nordic with a short position of Fundamental Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bavarian Nordic and Fundamental Invest.

Diversification Opportunities for Bavarian Nordic and Fundamental Invest

0.73

Correlation Coefficient

Bavarian Nordic  Fundamental Invest

Poor diversification

The 3 months correlation between Bavarian and Fundamental is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and Fundamental Invest Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Invest Stock and Bavarian Nordic 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 Bavarian Nordic are associated (or correlated) with Fundamental Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Invest Stock has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and Fundamental Invest go up and down completely randomly.

Pair Corralation between Bavarian Nordic and Fundamental Invest

Assuming the 90 days trading horizon Bavarian Nordic is expected to under-perform the Fundamental Invest. In addition to that, Bavarian Nordic is 1.2 times more volatile than Fundamental Invest Stock. It trades about -0.14 of its total potential returns per unit of risk. Fundamental Invest Stock is currently generating about -0.12 per unit of volatility. If you would invest  18,940  in Fundamental Invest Stock on December 26, 2024 and sell it today you would lose (2,560) from holding Fundamental Invest Stock or give up 13.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Bavarian Nordic  vs.  Fundamental Invest Stock

Bavarian Nordic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bavarian Nordic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fundamental Invest Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fundamental Invest Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Bavarian Nordic and Fundamental Invest

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

The idea behind Bavarian Nordic and Fundamental Invest Stock 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 Commodity Directory module to find actively traded commodities issued by global exchanges.