Correlation Between Viatris and NXG NextGen

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

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

Diversification Opportunities for Viatris and NXG NextGen

0.0

Correlation Coefficient

Viatris  NXG NextGen

Pay attention - limited upside

The 3 months correlation between Viatris and NXG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Viatris and NXG NextGen Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXG NextGen Infrastr 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 NXG NextGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXG NextGen Infrastr has no effect on the direction of Viatris i.e., Viatris and NXG NextGen go up and down completely randomly.

Pair Corralation between Viatris and NXG NextGen

Given the investment horizon of 90 days Viatris is expected to generate 2.0 times more return on investment than NXG NextGen. However, Viatris is 2.0 times more volatile than NXG NextGen Infrastructure. It trades about 0.04 of its potential returns per unit of risk. NXG NextGen Infrastructure is currently generating about -0.11 per unit of risk. If you would invest  1,133  in Viatris on August 6, 2024 and sell it today you would earn a total of  12.00  from holding Viatris or generate 1.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Viatris  vs.  NXG NextGen Infrastructure

Viatris

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Viatris are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Viatris is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

NXG NextGen Infrastr

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NXG NextGen Infrastructure are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, NXG NextGen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Viatris and NXG NextGen

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

The idea behind Viatris and NXG NextGen Infrastructure 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.