Correlation Between Moderna and Cassava Sciences

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

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

Diversification Opportunities for Moderna and Cassava Sciences

-0.44
  Correlation Coefficient
Moderna
Cassava Sciences

Very good diversification

The 3 months correlation between Moderna and Cassava is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Moderna and Cassava Sciences in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Cassava Sciences 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 Cassava Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cassava Sciences has no effect on the direction of Moderna i.e., Moderna and Cassava Sciences go up and down completely randomly.

Pair Corralation between Moderna and Cassava Sciences

Given the investment horizon of 90 days Moderna is expected to generate 2.72 times less return on investment than Cassava Sciences. But when comparing it to its historical volatility, Moderna is 2.82 times less risky than Cassava Sciences. It trades about 0.11 of its potential returns per unit of risk. Cassava Sciences is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  292.00  in Cassava Sciences on September 5, 2021 and sell it today you would earn a total of  4,293  from holding Cassava Sciences or generate 1470.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Moderna  vs.  Cassava Sciences

 Performance (%) 
      Timeline 
Moderna 
Moderna Performance
0 of 100
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 somewhat strong which may send shares a bit higher in January 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Moderna Price Channel

Cassava Sciences 
Cassava Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Cassava Sciences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Cassava Sciences sustained solid returns over the last few months and may actually be approaching a breakup point.

Cassava Price Channel

Moderna and Cassava Sciences Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Moderna and Cassava Sciences

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

Moderna

Pair trading matchups for Moderna

The idea behind Moderna and Cassava Sciences 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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