Correlation Between BRC and GILEAD

Can any of the company-specific risk be diversified away by investing in both BRC and GILEAD 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 BRC and GILEAD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BRC Inc and GILEAD SCIENCES INC, you can compare the effects of market volatilities on BRC and GILEAD 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 BRC with a short position of GILEAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRC and GILEAD.

Diversification Opportunities for BRC and GILEAD

-0.1

Correlation Coefficient

BRC  GILEAD

Good diversification

The 3 months correlation between BRC and GILEAD is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding BRC Inc and GILEAD SCIENCES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GILEAD SCIENCES INC and BRC 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 BRC Inc are associated (or correlated) with GILEAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GILEAD SCIENCES INC has no effect on the direction of BRC i.e., BRC and GILEAD go up and down completely randomly.

Pair Corralation between BRC and GILEAD

Given the investment horizon of 90 days BRC Inc is expected to under-perform the GILEAD. In addition to that, BRC is 26.88 times more volatile than GILEAD SCIENCES INC. It trades about -0.05 of its total potential returns per unit of risk. GILEAD SCIENCES INC is currently generating about 0.08 per unit of volatility. If you would invest  9,950  in GILEAD SCIENCES INC on October 23, 2024 and sell it today you would earn a total of  48.00  from holding GILEAD SCIENCES INC or generate 0.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BRC Inc  vs.  GILEAD SCIENCES INC

BRC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

GILEAD SCIENCES INC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GILEAD SCIENCES INC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, GILEAD is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BRC and GILEAD

The main advantage of trading using opposite BRC and GILEAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRC position performs unexpectedly, GILEAD 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 GILEAD will offset losses from the drop in GILEAD's long position.

The idea behind BRC Inc and GILEAD SCIENCES INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.