Correlation Between Moderna and Avax Techs

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

By analyzing existing cross correlation between Moderna and Avax Techs, you can compare the effects of market volatilities on Moderna and Avax Techs 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 Avax Techs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moderna and Avax Techs.

Diversification Opportunities for Moderna and Avax Techs

0.77

Correlation Coefficient

Moderna  Avax Techs

Poor diversification

The 3 months correlation between Moderna and Avax is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Moderna and Avax Techs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avax Techs 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 Avax Techs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avax Techs has no effect on the direction of Moderna i.e., Moderna and Avax Techs go up and down completely randomly.

Pair Corralation between Moderna and Avax Techs

Given the investment horizon of 90 days Moderna is expected to generate 0.28 times more return on investment than Avax Techs. However, Moderna is 3.56 times less risky than Avax Techs. It trades about -0.22 of its potential returns per unit of risk. Avax Techs is currently generating about -0.12 per unit of risk. If you would invest  7,294  in Moderna on September 2, 2024 and sell it today you would lose (2,988) from holding Moderna or give up 40.97% of portfolio value over 90 days.

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

Moderna  vs.  Avax Techs

Moderna

Risk-Adjusted Performance

0 of 100

Very Weak

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

Avax Techs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avax Techs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Moderna and Avax Techs

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

The idea behind Moderna and Avax Techs 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.