Correlation Between BioNTech and Kenvue

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

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

Diversification Opportunities for BioNTech and Kenvue

-0.31

Correlation Coefficient

BioNTech  Kenvue

Very good diversification

The 3 months correlation between BioNTech and Kenvue is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding BioNTech SE and Kenvue Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenvue Inc 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 Kenvue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenvue Inc has no effect on the direction of BioNTech i.e., BioNTech and Kenvue go up and down completely randomly.

Pair Corralation between BioNTech and Kenvue

Given the investment horizon of 90 days BioNTech SE is expected to generate 3.46 times more return on investment than Kenvue. However, BioNTech is 3.46 times more volatile than Kenvue Inc. It trades about -0.02 of its potential returns per unit of risk. Kenvue Inc is currently generating about -0.16 per unit of risk. If you would invest  11,351  in BioNTech SE on October 23, 2024 and sell it today you would lose (158.00) from holding BioNTech SE or give up 1.39% of portfolio value over 90 days.

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

BioNTech SE  vs.  Kenvue Inc

BioNTech SE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BioNTech SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Kenvue Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kenvue Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with BioNTech and Kenvue

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

The idea behind BioNTech SE and Kenvue Inc 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.