Correlation Between Viatris and Cardiol Therapeutics

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

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

Diversification Opportunities for Viatris and Cardiol Therapeutics

-0.52

Correlation Coefficient

Viatris  Cardiol Therapeutics

Excellent diversification

The 3 months correlation between Viatris and Cardiol is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Viatris and Cardiol Therapeutics Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardiol Therapeutics 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 Cardiol Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardiol Therapeutics has no effect on the direction of Viatris i.e., Viatris and Cardiol Therapeutics go up and down completely randomly.

Pair Corralation between Viatris and Cardiol Therapeutics

Given the investment horizon of 90 days Viatris is expected to generate 0.6 times more return on investment than Cardiol Therapeutics. However, Viatris is 1.67 times less risky than Cardiol Therapeutics. It trades about 0.08 of its potential returns per unit of risk. Cardiol Therapeutics Class is currently generating about -0.05 per unit of risk. If you would invest  1,189  in Viatris on September 2, 2024 and sell it today you would earn a total of  120.00  from holding Viatris or generate 10.09% 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.  Cardiol Therapeutics Class

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.

Cardiol Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardiol Therapeutics Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Viatris and Cardiol Therapeutics

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

The idea behind Viatris and Cardiol Therapeutics Class 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.