Correlation Between HP and Moderna

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

Diversification Opportunities for HP and Moderna

-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between HP and Moderna is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Moderna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderna and HP 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 HP Inc 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 HP i.e., HP and Moderna go up and down completely randomly.

Pair Corralation between HP and Moderna

Considering the 90-day investment horizon HP is expected to generate 20.06 times less return on investment than Moderna. But when comparing it to its historical volatility, HP Inc is 1.93 times less risky than Moderna. It trades about 0.02 of its potential returns per unit of risk. Moderna is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  12,853  in Moderna on May 16, 2022 and sell it today you would earn a total of  4,265  from holding Moderna or generate 33.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

HP Inc  vs.  Moderna

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

HP Price Channel

Moderna 
Moderna Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Moderna are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Moderna sustained solid returns over the last few months and may actually be approaching a breakup point.

Moderna Price Channel

HP and Moderna Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HP and Moderna

The main advantage of trading using opposite HP and Moderna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP 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.

HP Inc

Pair trading matchups for HP

The idea behind HP Inc 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.

Moderna

Pair trading matchups for Moderna

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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