Correlation Between Moderna and Bio Techne

Can any of the company-specific risk be diversified away by investing in both Moderna and Bio Techne 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 Bio Techne into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Moderna and Bio Techne, you can compare the effects of market volatilities on Moderna and Bio Techne 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 Bio Techne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moderna and Bio Techne.

Diversification Opportunities for Moderna and Bio Techne

-0.21

Correlation Coefficient

Moderna  Bio Techne

Very good diversification

The 3 months correlation between Moderna and Bio is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Moderna and Bio Techne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Techne 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 Bio Techne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Techne has no effect on the direction of Moderna i.e., Moderna and Bio Techne go up and down completely randomly.

Pair Corralation between Moderna and Bio Techne

Assuming the 90 days trading horizon Moderna is expected to under-perform the Bio Techne. But the stock apears to be less risky and, when comparing its historical volatility, Moderna is 1.11 times less risky than Bio Techne. The stock trades about -0.15 of its potential returns per unit of risk. The Bio Techne is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,385  in Bio Techne on September 24, 2024 and sell it today you would earn a total of  159.00  from holding Bio Techne or generate 11.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Moderna  vs.  Bio Techne

Moderna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moderna has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bio Techne

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Techne are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Bio Techne sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moderna and Bio Techne

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

The idea behind Moderna and Bio Techne 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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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 the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.