Correlation Between Viatris and Allovir

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

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

Diversification Opportunities for Viatris and Allovir

-0.71

Correlation Coefficient

Viatris  Allovir

Pay attention - limited upside

The 3 months correlation between Viatris and Allovir is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Viatris and Allovir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allovir and Viatris 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 Viatris are associated (or correlated) with Allovir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allovir has no effect on the direction of Viatris i.e., Viatris and Allovir go up and down completely randomly.

Pair Corralation between Viatris and Allovir

Given the investment horizon of 90 days Viatris is expected to generate 0.33 times more return on investment than Allovir. However, Viatris is 3.06 times less risky than Allovir. It trades about 0.08 of its potential returns per unit of risk. Allovir is currently generating about -0.04 per unit of risk. If you would invest  1,189  in Viatris on September 3, 2024 and sell it today you would earn a total of  120.00  from holding Viatris or generate 10.09% return on investment over 90 days.

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

Viatris  vs.  Allovir

Viatris

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Viatris are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Viatris may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Allovir

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allovir has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Viatris and Allovir

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

The idea behind Viatris and Allovir 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.