Correlation Between Viatris and X4 Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Viatris and X4 Pharmaceuticals 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 X4 Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Viatris and X4 Pharmaceuticals, you can compare the effects of market volatilities on Viatris and X4 Pharmaceuticals 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 X4 Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viatris and X4 Pharmaceuticals.

Diversification Opportunities for Viatris and X4 Pharmaceuticals

-0.59

Correlation Coefficient

Viatris  X4 Pharmaceuticals

Excellent diversification

The 3 months correlation between Viatris and XFOR is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Viatris and X4 Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X4 Pharmaceuticals 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 X4 Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X4 Pharmaceuticals has no effect on the direction of Viatris i.e., Viatris and X4 Pharmaceuticals go up and down completely randomly.

Pair Corralation between Viatris and X4 Pharmaceuticals

Given the investment horizon of 90 days Viatris is expected to generate 0.19 times more return on investment than X4 Pharmaceuticals. However, Viatris is 5.19 times less risky than X4 Pharmaceuticals. It trades about 0.19 of its potential returns per unit of risk. X4 Pharmaceuticals is currently generating about 0.01 per unit of risk. If you would invest  1,162  in Viatris on September 2, 2024 and sell it today you would earn a total of  147.00  from holding Viatris or generate 12.65% 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.  X4 Pharmaceuticals

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 uncertain basic indicators, Viatris may actually be approaching a critical reversion point that can send shares even higher in January 2025.

X4 Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days X4 Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Viatris and X4 Pharmaceuticals

The main advantage of trading using opposite Viatris and X4 Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viatris position performs unexpectedly, X4 Pharmaceuticals 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 X4 Pharmaceuticals will offset losses from the drop in X4 Pharmaceuticals' long position.

The idea behind Viatris and X4 Pharmaceuticals 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.