Correlation Between Disney and Viatris

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

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

Diversification Opportunities for Disney and Viatris

0.68

Correlation Coefficient

Disney  Viatris

Poor diversification

The 3 months correlation between Disney and Viatris is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Viatris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viatris and Disney 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 Walt Disney 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 Disney i.e., Disney and Viatris go up and down completely randomly.

Pair Corralation between Disney and Viatris

Considering the 90-day investment horizon Walt Disney is expected to generate 0.75 times more return on investment than Viatris. However, Walt Disney is 1.34 times less risky than Viatris. It trades about -0.07 of its potential returns per unit of risk. Viatris is currently generating about -0.19 per unit of risk. If you would invest  11,695  in Walt Disney on November 29, 2024 and sell it today you would lose (512.00) from holding Walt Disney or give up 4.38% of portfolio value over 90 days.

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

Walt Disney  vs.  Viatris

Walt Disney

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Disney is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Disney and Viatris

The main advantage of trading using opposite Disney and Viatris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney 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 Walt Disney 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.