Correlation Between Monks Investment and BioNTech

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

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

Diversification Opportunities for Monks Investment and BioNTech

0.06

Correlation Coefficient

Monks Investment  BioNTech

Significant diversification

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

Pair Corralation between Monks Investment and BioNTech

Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.27 times more return on investment than BioNTech. However, Monks Investment Trust is 3.75 times less risky than BioNTech. It trades about 0.16 of its potential returns per unit of risk. BioNTech SE is currently generating about -0.01 per unit of risk. If you would invest  118,000  in Monks Investment Trust on October 8, 2024 and sell it today you would earn a total of  10,000  from holding Monks Investment Trust or generate 8.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Monks Investment Trust  vs.  BioNTech SE

Monks Investment Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Monks Investment may actually be approaching a critical reversion point that can send shares even higher in February 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. Despite quite persistent essential indicators, BioNTech is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Monks Investment and BioNTech

The main advantage of trading using opposite Monks Investment and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks 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 Monks Investment Trust 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.