Correlation Between Moderna and Brickell Biotech

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

Diversification Opportunities for Moderna and Brickell Biotech

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Moderna and Brickell is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Moderna and Brickell Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brickell Biotech 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 Brickell Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brickell Biotech has no effect on the direction of Moderna i.e., Moderna and Brickell Biotech go up and down completely randomly.

Pair Corralation between Moderna and Brickell Biotech

Given the investment horizon of 90 days Moderna is expected to under-perform the Brickell Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Moderna is 1.84 times less risky than Brickell Biotech. The stock trades about -0.07 of its potential returns per unit of risk. The Brickell Biotech is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Brickell Biotech on February 27, 2022 and sell it today you would lose (8.00)  from holding Brickell Biotech or give up 33.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Moderna  vs.  Brickell Biotech

 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 somewhat strong basic indicators, Moderna is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Moderna Price Channel

Brickell Biotech 
Brickell Performance
0 of 100
Over the last 90 days Brickell Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Brickell Price Channel

Moderna and Brickell Biotech Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Moderna and Brickell Biotech

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

Moderna

Pair trading matchups for Moderna

The idea behind Moderna and Brickell Biotech 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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