Correlation Between Viatris and Cabaletta Bio

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

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

Diversification Opportunities for Viatris and Cabaletta Bio

0.74

Correlation Coefficient

Viatris  Cabaletta Bio

Poor diversification

The 3 months correlation between Viatris and Cabaletta is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Viatris and Cabaletta Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabaletta Bio 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 Cabaletta Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabaletta Bio has no effect on the direction of Viatris i.e., Viatris and Cabaletta Bio go up and down completely randomly.

Pair Corralation between Viatris and Cabaletta Bio

Given the investment horizon of 90 days Viatris is expected to under-perform the Cabaletta Bio. But the stock apears to be less risky and, when comparing its historical volatility, Viatris is 2.23 times less risky than Cabaletta Bio. The stock trades about -0.22 of its potential returns per unit of risk. The Cabaletta Bio is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  224.00  in Cabaletta Bio on December 30, 2024 and sell it today you would lose (69.00) from holding Cabaletta Bio or give up 30.8% of portfolio value over 90 days.

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

Viatris  vs.  Cabaletta Bio

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.

Cabaletta Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cabaletta Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Viatris and Cabaletta Bio

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

The idea behind Viatris and Cabaletta Bio 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.