Correlation Between Fidus Investment and BioNTech

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

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

Diversification Opportunities for Fidus Investment and BioNTech

0.04

Correlation Coefficient

Fidus Investment  BioNTech

Significant diversification

The 3 months correlation between Fidus and BioNTech is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Fidus Investment 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 Fidus Investment Corp 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 Fidus Investment i.e., Fidus Investment and BioNTech go up and down completely randomly.

Pair Corralation between Fidus Investment and BioNTech

Given the investment horizon of 90 days Fidus Investment is expected to generate 4.42 times less return on investment than BioNTech. But when comparing it to its historical volatility, Fidus Investment Corp is 5.83 times less risky than BioNTech. It trades about 0.42 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  9,972  in BioNTech SE on September 16, 2024 and sell it today you would earn a total of  2,066  from holding BioNTech SE or generate 20.72% return on investment over 90 days.

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

Fidus Investment Corp  vs.  BioNTech SE

Fidus Investment Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BioNTech SE

Risk-Adjusted Performance

0 of 100

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidus Investment and BioNTech

The main advantage of trading using opposite Fidus Investment and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidus Investment 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 Fidus Investment Corp 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.