Correlation Between Viatris and Lineage Cell

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

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

Diversification Opportunities for Viatris and Lineage Cell

0.29

Correlation Coefficient

Viatris  Lineage Cell

Modest diversification

The 3 months correlation between Viatris and Lineage is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Viatris and Lineage Cell Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lineage Cell Therapeutics 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 Lineage Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lineage Cell Therapeutics has no effect on the direction of Viatris i.e., Viatris and Lineage Cell go up and down completely randomly.

Pair Corralation between Viatris and Lineage Cell

Given the investment horizon of 90 days Viatris is expected to under-perform the Lineage Cell. But the stock apears to be less risky and, when comparing its historical volatility, Viatris is 2.19 times less risky than Lineage Cell. The stock trades about -0.22 of its potential returns per unit of risk. The Lineage Cell Therapeutics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Lineage Cell Therapeutics on December 29, 2024 and sell it today you would lose (1.00) from holding Lineage Cell Therapeutics or give up 2.0% of portfolio value over 90 days.

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

Viatris  vs.  Lineage Cell Therapeutics

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.

Lineage Cell Therapeutics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lineage Cell Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Lineage Cell may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Viatris and Lineage Cell

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

The idea behind Viatris and Lineage Cell Therapeutics 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.