Correlation Between Gilead Sciences and FibroGen
Can any of the company-specific risk be diversified away by investing in both Gilead Sciences and FibroGen 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 FibroGen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gilead Sciences and FibroGen, you can compare the effects of market volatilities on Gilead Sciences and FibroGen 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 FibroGen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilead Sciences and FibroGen.
Diversification Opportunities for Gilead Sciences and FibroGen
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gilead and FibroGen is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen 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 FibroGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibroGen has no effect on the direction of Gilead Sciences i.e., Gilead Sciences and FibroGen go up and down completely randomly.
Pair Corralation between Gilead Sciences and FibroGen
Given the investment horizon of 90 days Gilead Sciences is expected to generate 2.6 times less return on investment than FibroGen. But when comparing it to its historical volatility, Gilead Sciences is 6.14 times less risky than FibroGen. It trades about 0.04 of its potential returns per unit of risk. FibroGen is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 78.00 in FibroGen on September 3, 2024 and sell it today you would lose (36.00) from holding FibroGen or give up 46.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gilead Sciences vs. FibroGen
Performance |
| Timeline |
| Gilead Sciences |
| FibroGen |
Gilead Sciences and FibroGen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gilead Sciences and FibroGen
The main advantage of trading using opposite Gilead Sciences and FibroGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gilead Sciences position performs unexpectedly, FibroGen 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 FibroGen will offset losses from the drop in FibroGen's long position.| Gilead Sciences vs. Pfizer Inc | Gilead Sciences vs. Johnson Johnson | Gilead Sciences vs. Highway Holdings Limited | Gilead Sciences vs. QCR Holdings |
| FibroGen vs. Milestone Pharmaceuticals | FibroGen vs. Seres Therapeutics | FibroGen vs. DiaMedica Therapeutics | FibroGen vs. Lyra Therapeutics |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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