Correlation Between Viatris and Senti Biosciences

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

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

Diversification Opportunities for Viatris and Senti Biosciences

-0.33

Correlation Coefficient

Viatris  Senti Biosciences

Very good diversification

The 3 months correlation between Viatris and Senti is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Viatris and Senti Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senti Biosciences 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 Senti Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senti Biosciences has no effect on the direction of Viatris i.e., Viatris and Senti Biosciences go up and down completely randomly.

Pair Corralation between Viatris and Senti Biosciences

Given the investment horizon of 90 days Viatris is expected to generate 0.22 times more return on investment than Senti Biosciences. However, Viatris is 4.46 times less risky than Senti Biosciences. It trades about 0.06 of its potential returns per unit of risk. Senti Biosciences is currently generating about -0.02 per unit of risk. If you would invest  910.00  in Viatris on August 31, 2024 and sell it today you would earn a total of  412.00  from holding Viatris or generate 45.27% return on investment over 90 days.

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

Viatris  vs.  Senti Biosciences

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 unsteady basic indicators, Viatris may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Senti Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Senti Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Viatris and Senti Biosciences

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

The idea behind Viatris and Senti Biosciences 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.