Correlation Between Grocery Outlet and BioNTech

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

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

Diversification Opportunities for Grocery Outlet and BioNTech

0.06

Correlation Coefficient

Grocery Outlet  BioNTech

Significant diversification

The 3 months correlation between Grocery and BioNTech is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Grocery Outlet 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 Grocery Outlet Holding 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 Grocery Outlet i.e., Grocery Outlet and BioNTech go up and down completely randomly.

Pair Corralation between Grocery Outlet and BioNTech

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the BioNTech. In addition to that, Grocery Outlet is 1.01 times more volatile than BioNTech SE. It trades about -0.04 of its total potential returns per unit of risk. BioNTech SE is currently generating about -0.01 per unit of volatility. If you would invest  14,300  in BioNTech SE on October 5, 2024 and sell it today you would lose (2,770) from holding BioNTech SE or give up 19.37% of portfolio value over 90 days.

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

Grocery Outlet Holding  vs.  BioNTech SE

Grocery Outlet Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Grocery Outlet is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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

Pair Trading with Grocery Outlet and BioNTech

The main advantage of trading using opposite Grocery Outlet and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet 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 Grocery Outlet Holding 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.