While there are many players in the market mix to develop the Covid-19 vaccine, seven players have emerged as the frontline contenders. Of the seven, five are well-known pharmaceutical conglomerates: AstraZeneca (AZN), Johnson & Johnson (JNJ), Gilead Sciences (GILD), GlaxoSmithKline (GSK), and Pfizer (PFE). Despite having frontline status, their year-to-date growth rates have been quite subdued, ranging between -13% and +10%.
On the other hand, until the recent breakout of the coronavirus pandemic, Moderna (MRNA) and Novavax (NVAX) were more or less unknown names. The reason these two stocks have become household names is their meteoric rise in such a short period. While the year-to-date growth of Moderna has been an impressive 285%, Novavax has seen an astronomical growth of 3,693% (the stock price went from a mere $4.50 on 1/2/20 to $170.29 on 8/7/20).
Disclaimer - The author is not advocating any of the stocks listed here. Consult your Registered Rep, RIA or Financial Planner for an appropriate asset allocation model and the suitability of stocks and other holdings for you.
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The above correlations matrix demonstrates how the market perceives their inter-relations. As expected, Novavax has a high correlation with Moderna, but negative-to-moderate correlations with the other five.
Novavax has a moderately high correlation with AstraZeneca as the latter has returned 10% growth during this period. Conversely, Novavax has a negative correlation with Glaxo, as the latter has produced -13%, but has remained uncorrelated with Gilead, J&J, and Pfizer as these three name-brand stocks have flatlined.
Novavax has a moderately high correlation with AstraZeneca as the latter has returned 10% growth during this period. Conversely, Novavax has a negative correlation with Glaxo, as the latter has produced -13%, but has remained uncorrelated with Gilead, J&J, and Pfizer as these three name-brand stocks have flatlined.
Moderna, being the other growth stock, has very similar correlations with its competitors.
An aggressive growth fund, therefore, will choose both Moderna and Novavax, a balanced fund will stick to two-to-three from the name brand five, and a value fund will perhaps prefer the three dogs from the mix.
Stay safe!
Data Source: Yahoo Finance
Disclaimer - The author is not advocating any of the stocks listed here. Consult your Registered Rep, RIA or Financial Planner for an appropriate asset allocation model and the suitability of stocks and other holdings for you.
-Sid Som
homequant@gmail.com
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