Correlation Between Gilead Sciences and Regeneron Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Gilead Sciences and Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gilead Sciences and Regeneron Pharmaceuticals, you can compare the effects of market volatilities on Gilead Sciences and Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilead Sciences and Regeneron Pharmaceuticals.
Diversification Opportunities for Gilead Sciences and Regeneron Pharmaceuticals
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gilead and Regeneron is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and Regeneron Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regeneron Pharmaceuticals has no effect on the direction of Gilead Sciences i.e., Gilead Sciences and Regeneron Pharmaceuticals go up and down completely randomly.
Pair Corralation between Gilead Sciences and Regeneron Pharmaceuticals
Given the investment horizon of 90 days Gilead Sciences is expected to generate 0.82 times more return on investment than Regeneron Pharmaceuticals. However, Gilead Sciences is 1.22 times less risky than Regeneron Pharmaceuticals. It trades about 0.18 of its potential returns per unit of risk. Regeneron Pharmaceuticals is currently generating about -0.39 per unit of risk. If you would invest 7,896 in Gilead Sciences on September 2, 2024 and sell it today you would earn a total of 1,362 from holding Gilead Sciences or generate 17.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gilead Sciences vs. Regeneron Pharmaceuticals
Performance |
| Timeline |
| Gilead Sciences |
| Regeneron Pharmaceuticals |
Gilead Sciences and Regeneron Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gilead Sciences and Regeneron Pharmaceuticals
The main advantage of trading using opposite Gilead Sciences and Regeneron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gilead Sciences position performs unexpectedly, Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals will offset losses from the drop in Regeneron Pharmaceuticals' long position.| Gilead Sciences vs. Amgen Inc | Gilead Sciences vs. Merck Company | Gilead Sciences vs. AbbVie Inc | Gilead Sciences vs. Johnson Johnson |
| Regeneron Pharmaceuticals vs. Crispr Therapeutics AG | Regeneron Pharmaceuticals vs. Novo Nordisk AS | Regeneron Pharmaceuticals vs. Sarepta Therapeutics | Regeneron Pharmaceuticals vs. Intellia 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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