Correlation Between Biogen and Gilead Sciences
Can any of the company-specific risk be diversified away by investing in both Biogen and Gilead Sciences 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 Biogen and Gilead Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biogen Inc and Gilead Sciences, you can compare the effects of market volatilities on Biogen and Gilead Sciences 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 Biogen with a short position of Gilead Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biogen and Gilead Sciences.
Diversification Opportunities for Biogen and Gilead Sciences
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Biogen and Gilead is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc and Gilead Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gilead Sciences and Biogen 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 Biogen Inc are associated (or correlated) with Gilead Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gilead Sciences has no effect on the direction of Biogen i.e., Biogen and Gilead Sciences go up and down completely randomly.
Pair Corralation between Biogen and Gilead Sciences
Given the investment horizon of 90 days Biogen Inc is expected to under-perform the Gilead Sciences. But the stock apears to be less risky and, when comparing its historical volatility, Biogen Inc is 1.52 times less risky than Gilead Sciences. The stock trades about -0.54 of its potential returns per unit of risk. The Gilead Sciences is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,876 in Gilead Sciences on August 28, 2024 and sell it today you would earn a total of 173.00 from holding Gilead Sciences or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biogen Inc vs. Gilead Sciences
Performance |
| Timeline |
| Biogen Inc |
| Gilead Sciences |
Biogen and Gilead Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biogen and Gilead Sciences
The main advantage of trading using opposite Biogen and Gilead Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen position performs unexpectedly, Gilead Sciences 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 Gilead Sciences will offset losses from the drop in Gilead Sciences' long position.| Biogen vs. Bristol Myers Squibb | Biogen vs. AbbVie Inc | Biogen vs. Merck Company | Biogen vs. Gilead Sciences |
| Gilead Sciences vs. Amgen Inc | Gilead Sciences vs. Merck Company | Gilead Sciences vs. AbbVie Inc | Gilead Sciences vs. Johnson Johnson |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |