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:
Despite having frontline status, their year-to-date (YTD) growth rates have been relatively subdued, ranging between -20% and +8%.
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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 Moderna's YTD growth has been an impressive 274%, Novavax has seen an astronomical increase of 2,354% (the stock price went from a mere 4.49 on 1/2/20 to 178.51 on 8/10/20), pulling back to 110 on 10/5/20.
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The above correlations matrix demonstrates how the market perceives their inter-relations. Since Novavax and Moderna have performed in lockstep, they share the highest correlation between them. They also have a relatively high correlation with AstraZeneca as the latter has returned a positive 8% growth YTD, but negative-to-low positive correlations with the other four stocks.
Conversely, Moderna and Novavax have negative correlations with Glaxo, as the latter has produced -20%, but have remained slightly negative to uncorrelated with Gilead, J&J, and Pfizer as these three name-brand stocks have more or less flatlined.
Therefore, an aggressive growth fund 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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