Correlation Between Moderna and QuantumSi

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

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

Diversification Opportunities for Moderna and QuantumSi

0.47

Correlation Coefficient

Moderna  QuantumSi

Very weak diversification

The 3 months correlation between Moderna and QuantumSi is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Moderna and QuantumSi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QuantumSi 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 QuantumSi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QuantumSi has no effect on the direction of Moderna i.e., Moderna and QuantumSi go up and down completely randomly.

Pair Corralation between Moderna and QuantumSi

Given the investment horizon of 90 days Moderna is expected to generate 0.71 times more return on investment than QuantumSi. However, Moderna is 1.41 times less risky than QuantumSi. It trades about -0.01 of its potential returns per unit of risk. QuantumSi is currently generating about -0.28 per unit of risk. If you would invest  10,308  in Moderna on January 20, 2024 and sell it today you would lose (108.00) from holding Moderna or give up 1.05% of portfolio value over 90 days.

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

Moderna  vs.  QuantumSi

Moderna

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Moderna are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Moderna is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

QuantumSi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QuantumSi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, QuantumSi is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Moderna and QuantumSi

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

The idea behind Moderna and QuantumSi 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.