Correlation Between Moderna and Berkeley Lights

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

Diversification Opportunities for Moderna and Berkeley Lights

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Moderna and Berkeley is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Moderna and Berkeley Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkeley Lights 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 Berkeley Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkeley Lights has no effect on the direction of Moderna i.e., Moderna and Berkeley Lights go up and down completely randomly.

Pair Corralation between Moderna and Berkeley Lights

Given the investment horizon of 90 days Moderna is expected to generate 0.57 times more return on investment than Berkeley Lights. However, Moderna is 1.77 times less risky than Berkeley Lights. It trades about -0.03 of its potential returns per unit of risk. Berkeley Lights is currently generating about -0.02 per unit of risk. If you would invest  17,254  in Moderna on April 3, 2022 and sell it today you would lose (2,259)  from holding Moderna or give up 13.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Moderna  vs.  Berkeley Lights

 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 latest sluggish performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Moderna Price Channel

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

Berkeley Price Channel

Moderna and Berkeley Lights Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Moderna and Berkeley Lights

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

Moderna

Pair trading matchups for Moderna

The idea behind Moderna and Berkeley Lights 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.

Berkeley Lights

Pair trading matchups for Berkeley Lights

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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