Correlation Between Vir Biotechnology and CureVac NV

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

By analyzing existing cross correlation between Vir Biotechnology and CureVac NV, you can compare the effects of market volatilities on Vir Biotechnology and CureVac NV 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 Vir Biotechnology with a short position of CureVac NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vir Biotechnology and CureVac NV.

Diversification Opportunities for Vir Biotechnology and CureVac NV

0.73

Correlation Coefficient

Vir Biotechnology  CureVac NV

Poor diversification

The 3 months correlation between Vir and CureVac is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vir Biotechnology and CureVac NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CureVac NV and Vir Biotechnology 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 Vir Biotechnology are associated (or correlated) with CureVac NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CureVac NV has no effect on the direction of Vir Biotechnology i.e., Vir Biotechnology and CureVac NV go up and down completely randomly.

Pair Corralation between Vir Biotechnology and CureVac NV

Considering the 90-day investment horizon Vir Biotechnology is expected to generate 1.79 times more return on investment than CureVac NV. However, Vir Biotechnology is 1.79 times more volatile than CureVac NV. It trades about 0.01 of its potential returns per unit of risk. CureVac NV is currently generating about -0.02 per unit of risk. If you would invest  747.00  in Vir Biotechnology on December 27, 2024 and sell it today you would lose (80.00) from holding Vir Biotechnology or give up 10.71% of portfolio value over 90 days.

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

Vir Biotechnology  vs.  CureVac NV

Vir Biotechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vir Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Vir Biotechnology is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

CureVac NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days CureVac NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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 Vir Biotechnology and CureVac NV

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

The idea behind Vir Biotechnology and CureVac NV 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.