Correlation Between BioNTech and Arrow Electronics

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

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

Diversification Opportunities for BioNTech and Arrow Electronics

0.17

Correlation Coefficient

BioNTech  Arrow Electronics

Average diversification

The 3 months correlation between BioNTech and Arrow is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 are associated (or correlated) with Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of BioNTech i.e., BioNTech and Arrow Electronics go up and down completely randomly.

Pair Corralation between BioNTech and Arrow Electronics

Given the investment horizon of 90 days BioNTech SE is expected to generate 1.81 times more return on investment than Arrow Electronics. However, BioNTech is 1.81 times more volatile than Arrow Electronics. It trades about 0.14 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.04 per unit of risk. If you would invest  8,800  in BioNTech SE on September 3, 2024 and sell it today you would earn a total of  3,039  from holding BioNTech SE or generate 34.53% return on investment over 90 days.

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

BioNTech SE  vs.  Arrow Electronics

BioNTech SE

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BioNTech showed solid returns over the last few months and may actually be approaching a breakup point.

Arrow Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Arrow Electronics is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with BioNTech and Arrow Electronics

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

The idea behind BioNTech SE and Arrow Electronics 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.