Correlation Between Merck and Moderna
Can any of the company-specific risk be diversified away by investing in both Merck 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 Merck and Moderna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Moderna, you can compare the effects of market volatilities on Merck 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 Merck with a short position of Moderna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Moderna.
Diversification Opportunities for Merck and Moderna
Almost no diversification
The 3 months correlation between Merck and Moderna is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Moderna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderna and Merck 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 Merck Company 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 Merck i.e., Merck and Moderna go up and down completely randomly.
Pair Corralation between Merck and Moderna
Considering the 90-day investment horizon Merck Company is expected to generate 0.37 times more return on investment than Moderna. However, Merck Company is 2.72 times less risky than Moderna. It trades about 0.01 of its potential returns per unit of risk. Moderna is currently generating about -0.07 per unit of risk. If you would invest 9,930 in Merck Company on August 27, 2024 and sell it today you would lose (12.00) from holding Merck Company or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Moderna
Performance |
| Timeline |
| Merck Company |
| Moderna |
Merck and Moderna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Moderna
The main advantage of trading using opposite Merck and Moderna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck 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.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Moderna vs. CureVac NV | Moderna vs. Novavax | Moderna vs. Ocean Biomedical | Moderna vs. Enveric Biosciences |
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 the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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