Correlation Between Banco De and Viatris

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

By analyzing existing cross correlation between Banco De Chile and Viatris, you can compare the effects of market volatilities on Banco De and Viatris 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 Banco De with a short position of Viatris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco De and Viatris.

Diversification Opportunities for Banco De and Viatris

-0.89

Correlation Coefficient

Banco De  Viatris

Pay attention - limited upside

The 3 months correlation between Banco and Viatris is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Banco De Chile and Viatris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viatris and Banco De 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 Banco De Chile are associated (or correlated) with Viatris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viatris has no effect on the direction of Banco De i.e., Banco De and Viatris go up and down completely randomly.

Pair Corralation between Banco De and Viatris

Considering the 90-day investment horizon Banco De Chile is expected to generate 0.5 times more return on investment than Viatris. However, Banco De Chile is 1.98 times less risky than Viatris. It trades about 0.33 of its potential returns per unit of risk. Viatris is currently generating about -0.22 per unit of risk. If you would invest  2,088  in Banco De Chile on December 28, 2024 and sell it today you would earn a total of  571.00  from holding Banco De Chile or generate 27.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Banco De Chile  vs.  Viatris

Banco De Chile

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Banco De Chile are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Banco De demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Viatris

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viatris has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Banco De and Viatris

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

The idea behind Banco De Chile and Viatris 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.