Correlation Between Exxon and Moderna

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

Diversification Opportunities for Exxon and Moderna

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Exxon and Moderna is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Moderna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderna and Exxon 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 Exxon Mobil Corp 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 Exxon i.e., Exxon and Moderna go up and down completely randomly.

Pair Corralation between Exxon and Moderna

Considering the 90-day investment horizon Exxon is expected to generate 1.54 times less return on investment than Moderna. But when comparing it to its historical volatility, Exxon Mobil Corp is 2.28 times less risky than Moderna. It trades about 0.09 of its potential returns per unit of risk. Moderna is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,488  in Moderna on May 16, 2022 and sell it today you would earn a total of  10,630  from holding Moderna or generate 163.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Exxon Mobil Corp  vs.  Moderna

 Performance (%) 
       Timeline  
Exxon Mobil Corp 
Exxon Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Exxon is not utilizing all of its potentials. The new stock price chaos, may contribute to medium-term losses for the stakeholders.

Exxon 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

Exxon and Moderna Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Exxon and Moderna

The main advantage of trading using opposite Exxon and Moderna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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.
The idea behind Exxon Mobil Corp 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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

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