Correlation Between Viatris and Teva Pharma
Can any of the company-specific risk be diversified away by investing in both Viatris and Teva Pharma 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 Teva Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viatris and Teva Pharma Industries, you can compare the effects of market volatilities on Viatris and Teva Pharma 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 Teva Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viatris and Teva Pharma.
Diversification Opportunities for Viatris and Teva Pharma
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Viatris and Teva is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Viatris and Teva Pharma Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharma Industries 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 Teva Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharma Industries has no effect on the direction of Viatris i.e., Viatris and Teva Pharma go up and down completely randomly.
Pair Corralation between Viatris and Teva Pharma
Given the investment horizon of 90 days Viatris is expected to under-perform the Teva Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Viatris is 3.4 times less risky than Teva Pharma. The stock trades about -0.24 of its potential returns per unit of risk. The Teva Pharma Industries is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,681 in Teva Pharma Industries on October 20, 2024 and sell it today you would earn a total of 511.00 from holding Teva Pharma Industries or generate 30.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Viatris vs. Teva Pharma Industries
Performance |
| Timeline |
| Viatris |
| Teva Pharma Industries |
Viatris and Teva Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Viatris and Teva Pharma
The main advantage of trading using opposite Viatris and Teva Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viatris position performs unexpectedly, Teva Pharma 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 Teva Pharma will offset losses from the drop in Teva Pharma's long position.| Viatris vs. Bausch Health Companies | Viatris vs. Tilray Inc | Viatris vs. Takeda Pharmaceutical Co | Viatris vs. Elanco Animal Health |
| Teva Pharma vs. Haleon plc | Teva Pharma vs. Bausch Health Companies | Teva Pharma vs. Zoetis Inc | Teva Pharma vs. Takeda Pharmaceutical Co |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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