Correlation Between Gilead Sciences and Sutro Biopharma
Can any of the company-specific risk be diversified away by investing in both Gilead Sciences and Sutro Biopharma 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 Sutro Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gilead Sciences and Sutro Biopharma, you can compare the effects of market volatilities on Gilead Sciences and Sutro Biopharma 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 Sutro Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilead Sciences and Sutro Biopharma.
Diversification Opportunities for Gilead Sciences and Sutro Biopharma
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gilead and Sutro is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and Sutro Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sutro Biopharma 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 Sutro Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sutro Biopharma has no effect on the direction of Gilead Sciences i.e., Gilead Sciences and Sutro Biopharma go up and down completely randomly.
Pair Corralation between Gilead Sciences and Sutro Biopharma
Given the investment horizon of 90 days Gilead Sciences is expected to generate 0.27 times more return on investment than Sutro Biopharma. However, Gilead Sciences is 3.67 times less risky than Sutro Biopharma. It trades about 0.18 of its potential returns per unit of risk. Sutro Biopharma is currently generating about -0.12 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gilead Sciences vs. Sutro Biopharma
Performance |
| Timeline |
| Gilead Sciences |
| Sutro Biopharma |
Gilead Sciences and Sutro Biopharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gilead Sciences and Sutro Biopharma
The main advantage of trading using opposite Gilead Sciences and Sutro Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gilead Sciences position performs unexpectedly, Sutro Biopharma 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 Sutro Biopharma will offset losses from the drop in Sutro Biopharma's long position.| Gilead Sciences vs. Amgen Inc | Gilead Sciences vs. Merck Company | Gilead Sciences vs. AbbVie Inc | Gilead Sciences vs. Johnson Johnson |
| Sutro Biopharma vs. Tff Pharmaceuticals | Sutro Biopharma vs. Eliem Therapeutics | Sutro Biopharma vs. Inhibrx | Sutro Biopharma vs. Enliven 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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