Correlation Between Viatris and Star Equity

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

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

Diversification Opportunities for Viatris and Star Equity

-0.45

Correlation Coefficient

Viatris  Star Equity

Very good diversification

The 3 months correlation between Viatris and Star is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Viatris and Star Equity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Equity Holdings 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 Star Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Equity Holdings has no effect on the direction of Viatris i.e., Viatris and Star Equity go up and down completely randomly.

Pair Corralation between Viatris and Star Equity

Given the investment horizon of 90 days Viatris is expected to under-perform the Star Equity. But the stock apears to be less risky and, when comparing its historical volatility, Viatris is 1.59 times less risky than Star Equity. The stock trades about -0.22 of its potential returns per unit of risk. The Star Equity Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  212.00  in Star Equity Holdings on December 28, 2024 and sell it today you would earn a total of  39.00  from holding Star Equity Holdings or generate 18.4% return on investment over 90 days.

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

Viatris  vs.  Star Equity Holdings

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.

Star Equity Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Star Equity Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Star Equity reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Viatris and Star Equity

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

The idea behind Viatris and Star Equity Holdings 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.