Correlation Between Warner Bros and Viatris

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

By analyzing existing cross correlation between Warner Bros Discovery and Viatris, you can compare the effects of market volatilities on Warner Bros and Viatris 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 Warner Bros with a short position of Viatris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Bros and Viatris.

Diversification Opportunities for Warner Bros and Viatris

0.9

Correlation Coefficient

Warner Bros  Viatris

Almost no diversification

The 3 months correlation between Warner and Viatris is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery and Viatris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viatris and Warner Bros 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 Warner Bros Discovery are associated (or correlated) with Viatris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viatris has no effect on the direction of Warner Bros i.e., Warner Bros and Viatris go up and down completely randomly.

Pair Corralation between Warner Bros and Viatris

Considering the 90-day investment horizon Warner Bros Discovery is expected to generate 1.2 times more return on investment than Viatris. However, Warner Bros is 1.2 times more volatile than Viatris. It trades about 0.26 of its potential returns per unit of risk. Viatris is currently generating about 0.14 per unit of risk. If you would invest  778.00  in Warner Bros Discovery on September 4, 2024 and sell it today you would earn a total of  278.00  from holding Warner Bros Discovery or generate 35.73% return on investment over 90 days.

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

Warner Bros Discovery  vs.  Viatris

Warner Bros Discovery

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Bros Discovery are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, Warner Bros exhibited solid returns over the last few months and may actually be approaching a breakup point.

Viatris

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viatris are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Viatris unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Warner Bros and Viatris

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

The idea behind Warner Bros Discovery and Viatris 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.