Correlation Between Gilead Sciences and Scilex Holding
Can any of the company-specific risk be diversified away by investing in both Gilead Sciences and Scilex Holding 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 Scilex Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gilead Sciences and Scilex Holding, you can compare the effects of market volatilities on Gilead Sciences and Scilex Holding 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 Scilex Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilead Sciences and Scilex Holding.
Diversification Opportunities for Gilead Sciences and Scilex Holding
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gilead and Scilex is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and Scilex Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scilex Holding 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 Scilex Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scilex Holding has no effect on the direction of Gilead Sciences i.e., Gilead Sciences and Scilex Holding go up and down completely randomly.
Pair Corralation between Gilead Sciences and Scilex Holding
Given the investment horizon of 90 days Gilead Sciences is expected to generate 0.28 times more return on investment than Scilex Holding. However, Gilead Sciences is 3.56 times less risky than Scilex Holding. It trades about 0.07 of its potential returns per unit of risk. Scilex Holding is currently generating about -0.23 per unit of risk. If you would invest 8,876 in Gilead Sciences on August 29, 2024 and sell it today you would earn a total of 259.00 from holding Gilead Sciences or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gilead Sciences vs. Scilex Holding
Performance |
| Timeline |
| Gilead Sciences |
| Scilex Holding |
Gilead Sciences and Scilex Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gilead Sciences and Scilex Holding
The main advantage of trading using opposite Gilead Sciences and Scilex Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gilead Sciences position performs unexpectedly, Scilex Holding 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 Scilex Holding will offset losses from the drop in Scilex Holding's long position.| Gilead Sciences vs. Amgen Inc | Gilead Sciences vs. Merck Company | Gilead Sciences vs. AbbVie Inc | Gilead Sciences vs. Johnson Johnson |
| Scilex Holding vs. AstraZeneca PLC ADR | Scilex Holding vs. Gilead Sciences | Scilex Holding vs. Bristol Myers Squibb | Scilex Holding vs. Amgen Inc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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