Correlation Between Viatris and NRBO Old

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

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

Diversification Opportunities for Viatris and NRBO Old

0.69

Correlation Coefficient

Viatris  NRBO Old

Poor diversification

The 3 months correlation between Viatris and NRBO is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Viatris and NRBO Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRBO Old 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 NRBO Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRBO Old has no effect on the direction of Viatris i.e., Viatris and NRBO Old go up and down completely randomly.

Pair Corralation between Viatris and NRBO Old

Given the investment horizon of 90 days Viatris is expected to under-perform the NRBO Old. But the stock apears to be less risky and, when comparing its historical volatility, Viatris is 2.19 times less risky than NRBO Old. The stock trades about -0.21 of its potential returns per unit of risk. The NRBO Old is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  198.00  in NRBO Old on December 29, 2024 and sell it today you would lose (9.00) from holding NRBO Old or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	34.43%
Values	Daily Returns

Viatris  vs.  NRBO Old

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.

NRBO Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days NRBO Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, NRBO Old is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Viatris and NRBO Old

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

The idea behind Viatris and NRBO Old 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.