Correlation Between Moderna and Procter Gamble

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

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

Diversification Opportunities for Moderna and Procter Gamble

0.11

Correlation Coefficient

Moderna  Procter Gamble

Average diversification

The 3 months correlation between Moderna and Procter is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Moderna and The Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Moderna 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 Moderna are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Moderna i.e., Moderna and Procter Gamble go up and down completely randomly.

Pair Corralation between Moderna and Procter Gamble

Assuming the 90 days horizon Moderna is expected to under-perform the Procter Gamble. In addition to that, Moderna is 4.08 times more volatile than The Procter Gamble. It trades about -0.05 of its total potential returns per unit of risk. The Procter Gamble is currently generating about -0.03 per unit of volatility. If you would invest  16,882  in The Procter Gamble on November 29, 2024 and sell it today you would lose (494.00) from holding The Procter Gamble or give up 2.93% of portfolio value over 90 days.

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

Moderna  vs.  The Procter Gamble

Moderna

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moderna has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Procter Gamble

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Procter Gamble is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Moderna and Procter Gamble

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

The idea behind Moderna and The Procter Gamble 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.