Correlation Between Viatris and LMF Acquisition

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

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

Diversification Opportunities for Viatris and LMF Acquisition

-0.4

Correlation Coefficient

Viatris  LMF Acquisition

Very good diversification

The 3 months correlation between Viatris and LMF is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Viatris and LMF Acquisition Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LMF Acquisition Oppo 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 LMF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LMF Acquisition Oppo has no effect on the direction of Viatris i.e., Viatris and LMF Acquisition go up and down completely randomly.

Pair Corralation between Viatris and LMF Acquisition

Given the investment horizon of 90 days Viatris is expected to generate 36.39 times less return on investment than LMF Acquisition. But when comparing it to its historical volatility, Viatris is 10.48 times less risky than LMF Acquisition. It trades about 0.02 of its potential returns per unit of risk. LMF Acquisition Opportunities is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4.00  in LMF Acquisition Opportunities on November 20, 2024 and sell it today you would lose (0.71) from holding LMF Acquisition Opportunities or give up 17.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.49%
Values	Daily Returns

Viatris  vs.  LMF Acquisition Opportunities

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.

LMF Acquisition Oppo

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LMF Acquisition Opportunities are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, LMF Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Viatris and LMF Acquisition

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

The idea behind Viatris and LMF Acquisition Opportunities 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.