Correlation Between Viatris and Vericel Corp

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

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

Diversification Opportunities for Viatris and Vericel Corp

0.79

Correlation Coefficient

Viatris  Vericel Corp

Poor diversification

The 3 months correlation between Viatris and Vericel is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Viatris and Vericel Corp Ord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vericel Corp Ord 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 Vericel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vericel Corp Ord has no effect on the direction of Viatris i.e., Viatris and Vericel Corp go up and down completely randomly.

Pair Corralation between Viatris and Vericel Corp

Given the investment horizon of 90 days Viatris is expected to under-perform the Vericel Corp. But the stock apears to be less risky and, when comparing its historical volatility, Viatris is 1.06 times less risky than Vericel Corp. The stock trades about -0.21 of its potential returns per unit of risk. The Vericel Corp Ord is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  5,530  in Vericel Corp Ord on December 29, 2024 and sell it today you would lose (1,080) from holding Vericel Corp Ord or give up 19.53% of portfolio value over 90 days.

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

Viatris  vs.  Vericel Corp Ord

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.

Vericel Corp Ord

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vericel Corp Ord 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Viatris and Vericel Corp

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

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