Correlation Between American Electric and Moderna

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Can any of the company-specific risk be diversified away by investing in both American Electric and Moderna 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 American Electric and Moderna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Electric Power and Moderna, you can compare the effects of market volatilities on American Electric and Moderna 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 American Electric with a short position of Moderna. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Electric and Moderna.

Diversification Opportunities for American Electric and Moderna

  Correlation Coefficient

Significant diversification

The 3 months correlation between American and Moderna is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding American Electric Power and Moderna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderna and American Electric 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 American Electric Power are associated (or correlated) with Moderna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderna has no effect on the direction of American Electric i.e., American Electric and Moderna go up and down completely randomly.

Pair Corralation between American Electric and Moderna

Considering the 90-day investment horizon American Electric Power is expected to generate 0.34 times more return on investment than Moderna. However, American Electric Power is 2.98 times less risky than Moderna. It trades about 0.05 of its potential returns per unit of risk. Moderna is currently generating about -0.02 per unit of risk. If you would invest  8,075  in American Electric Power on September 5, 2022 and sell it today you would earn a total of  1,437  from holding American Electric Power or generate 17.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

American Electric Power  vs.  Moderna

 Performance (%) 
American Electric Power 
American Performance
0 of 100
Over the last 90 days American Electric Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, American Electric is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the insiders.

American Price Channel

Moderna Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Moderna are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Moderna sustained solid returns over the last few months and may actually be approaching a breakup point.

Moderna Price Channel

American Electric and Moderna Volatility Contrast

   Predicted Return Density   

Pair Trading with American Electric and Moderna

The main advantage of trading using opposite American Electric and Moderna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Electric position performs unexpectedly, Moderna 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 Moderna will offset losses from the drop in Moderna's long position.
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The idea behind American Electric Power and Moderna 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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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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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