Correlation Between Gilead Sciences and Grupo Hotelero
Can any of the company-specific risk be diversified away by investing in both Gilead Sciences and Grupo Hotelero 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 Gilead Sciences and Grupo Hotelero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gilead Sciences and Grupo Hotelero Santa, you can compare the effects of market volatilities on Gilead Sciences and Grupo Hotelero 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 Gilead Sciences with a short position of Grupo Hotelero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilead Sciences and Grupo Hotelero.
Diversification Opportunities for Gilead Sciences and Grupo Hotelero
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gilead and Grupo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and Grupo Hotelero Santa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Hotelero Santa and Gilead Sciences 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 Gilead Sciences are associated (or correlated) with Grupo Hotelero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Hotelero Santa has no effect on the direction of Gilead Sciences i.e., Gilead Sciences and Grupo Hotelero go up and down completely randomly.
Pair Corralation between Gilead Sciences and Grupo Hotelero
Assuming the 90 days trading horizon Gilead Sciences is expected to generate 2.66 times more return on investment than Grupo Hotelero. However, Gilead Sciences is 2.66 times more volatile than Grupo Hotelero Santa. It trades about 0.1 of its potential returns per unit of risk. Grupo Hotelero Santa is currently generating about 0.18 per unit of risk. If you would invest 182,000 in Gilead Sciences on September 3, 2024 and sell it today you would earn a total of 7,240 from holding Gilead Sciences or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Gilead Sciences vs. Grupo Hotelero Santa
Performance |
| Timeline |
| Gilead Sciences |
| Grupo Hotelero Santa |
Gilead Sciences and Grupo Hotelero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gilead Sciences and Grupo Hotelero
The main advantage of trading using opposite Gilead Sciences and Grupo Hotelero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gilead Sciences position performs unexpectedly, Grupo Hotelero 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 Grupo Hotelero will offset losses from the drop in Grupo Hotelero's long position.| Gilead Sciences vs. Grupo Hotelero Santa | Gilead Sciences vs. FIBRA Storage | Gilead Sciences vs. Ameriprise Financial | Gilead Sciences vs. Cognizant Technology Solutions |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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