Correlation Between Travelers Companies and Viatris

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

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

Diversification Opportunities for Travelers Companies and Viatris

0.59

Correlation Coefficient

Travelers Companies  Viatris

Very weak diversification

The 3 months correlation between Travelers and Viatris is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Viatris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viatris and Travelers Companies 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 The Travelers Companies 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 Travelers Companies i.e., Travelers Companies and Viatris go up and down completely randomly.

Pair Corralation between Travelers Companies and Viatris

Considering the 90-day investment horizon Travelers Companies is expected to generate 1.54 times less return on investment than Viatris. In addition to that, Travelers Companies is 1.04 times more volatile than Viatris. It trades about 0.01 of its total potential returns per unit of risk. Viatris is currently generating about 0.02 per unit of volatility. If you would invest  1,120  in Viatris on November 29, 2024 and sell it today you would earn a total of  4.00  from holding Viatris or generate 0.36% return on investment over 90 days.

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

The Travelers Companies  vs.  Viatris

The Travelers Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Travelers Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Travelers Companies is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated 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 Travelers Companies and Viatris

The main advantage of trading using opposite Travelers Companies and Viatris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travelers Companies 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 The Travelers Companies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.