Correlation Between Gilead Sciences and Cingulate Warrants

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

By analyzing existing cross correlation between Gilead Sciences and Cingulate Warrants, you can compare the effects of market volatilities on Gilead Sciences and Cingulate Warrants 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 Cingulate Warrants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilead Sciences and Cingulate Warrants.

Diversification Opportunities for Gilead Sciences and Cingulate Warrants

-0.14

Correlation Coefficient

Gilead Sciences  Cingulate Warrants

Good diversification

The 3 months correlation between Gilead and Cingulate is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and Cingulate Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate Warrants 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 Cingulate Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate Warrants has no effect on the direction of Gilead Sciences i.e., Gilead Sciences and Cingulate Warrants go up and down completely randomly.

Pair Corralation between Gilead Sciences and Cingulate Warrants

Given the investment horizon of 90 days Gilead Sciences is expected to under-perform the Cingulate Warrants. But the stock apears to be less risky and, when comparing its historical volatility, Gilead Sciences is 27.46 times less risky than Cingulate Warrants. The stock trades about -0.04 of its potential returns per unit of risk. The Cingulate Warrants is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  3.59  in Cingulate Warrants on October 21, 2024 and sell it today you would earn a total of  4.40  from holding Cingulate Warrants or generate 122.56% return on investment over 90 days.

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

Gilead Sciences  vs.  Cingulate Warrants

Gilead Sciences

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gilead Sciences are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Gilead Sciences may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cingulate Warrants

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cingulate Warrants are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Cingulate Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gilead Sciences and Cingulate Warrants

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

The idea behind Gilead Sciences and Cingulate Warrants 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 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.