Correlation Between Gilead Sciences and Mayne Pharma
Can any of the company-specific risk be diversified away by investing in both Gilead Sciences and Mayne 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 Gilead Sciences and Mayne Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gilead Sciences and Mayne Pharma Group, you can compare the effects of market volatilities on Gilead Sciences and Mayne 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 Gilead Sciences with a short position of Mayne Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilead Sciences and Mayne Pharma.
Diversification Opportunities for Gilead Sciences and Mayne Pharma
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gilead and Mayne is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and Mayne Pharma Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayne Pharma Group 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 Mayne Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayne Pharma Group has no effect on the direction of Gilead Sciences i.e., Gilead Sciences and Mayne Pharma go up and down completely randomly.
Pair Corralation between Gilead Sciences and Mayne Pharma
Given the investment horizon of 90 days Gilead Sciences is expected to generate 0.48 times more return on investment than Mayne Pharma. However, Gilead Sciences is 2.08 times less risky than Mayne Pharma. It trades about 0.06 of its potential returns per unit of risk. Mayne Pharma Group is currently generating about 0.03 per unit of risk. If you would invest 7,297 in Gilead Sciences on September 14, 2024 and sell it today you would earn a total of 1,889 from holding Gilead Sciences or generate 25.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Gilead Sciences vs. Mayne Pharma Group
Performance |
| Timeline |
| Gilead Sciences |
| Mayne Pharma Group |
Gilead Sciences and Mayne Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gilead Sciences and Mayne Pharma
The main advantage of trading using opposite Gilead Sciences and Mayne Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gilead Sciences position performs unexpectedly, Mayne 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 Mayne Pharma will offset losses from the drop in Mayne Pharma's long position.| Gilead Sciences vs. Puma Biotechnology | Gilead Sciences vs. Iovance Biotherapeutics | Gilead Sciences vs. Day One Biopharmaceuticals | Gilead Sciences vs. Inozyme Pharma |
| Mayne Pharma vs. Bristol Myers Squibb | Mayne Pharma vs. AbbVie Inc | Mayne Pharma vs. Merck Company | Mayne Pharma vs. Gilead Sciences |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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