Correlation Between Liberty and BioNTech

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

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

Diversification Opportunities for Liberty and BioNTech

-0.28

Correlation Coefficient

Liberty  BioNTech

Very good diversification

The 3 months correlation between Liberty and BioNTech is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Interactive LLC and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE and Liberty 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 Liberty Interactive LLC 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 Liberty i.e., Liberty and BioNTech go up and down completely randomly.

Pair Corralation between Liberty and BioNTech

Assuming the 90 days trading horizon Liberty Interactive LLC is expected to generate 0.72 times more return on investment than BioNTech. However, Liberty Interactive LLC is 1.4 times less risky than BioNTech. It trades about 0.0 of its potential returns per unit of risk. BioNTech SE is currently generating about -0.07 per unit of risk. If you would invest  5,271  in Liberty Interactive LLC on March 21, 2024 and sell it today you would lose (21.00) from holding Liberty Interactive LLC or give up 0.4% of portfolio value over 90 days.

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

Liberty Interactive LLC  vs.  BioNTech SE

Liberty Interactive LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Interactive LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for Liberty Interactive LLC 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 newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Liberty and BioNTech

The main advantage of trading using opposite Liberty and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty 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 Liberty Interactive LLC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.