Correlation Between Gilead Sciences and Ikena Oncology

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

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

Diversification Opportunities for Gilead Sciences and Ikena Oncology

-0.7

Correlation Coefficient

Gilead Sciences  Ikena Oncology

Excellent diversification

The 3 months correlation between Gilead and Ikena is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and Ikena Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ikena Oncology 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 Ikena Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ikena Oncology has no effect on the direction of Gilead Sciences i.e., Gilead Sciences and Ikena Oncology go up and down completely randomly.

Pair Corralation between Gilead Sciences and Ikena Oncology

Given the investment horizon of 90 days Gilead Sciences is expected to generate 1.03 times more return on investment than Ikena Oncology. However, Gilead Sciences is 1.03 times more volatile than Ikena Oncology. It trades about 0.37 of its potential returns per unit of risk. Ikena Oncology is currently generating about -0.19 per unit of risk. If you would invest  9,535  in Gilead Sciences on November 28, 2024 and sell it today you would earn a total of  1,618  from holding Gilead Sciences or generate 16.97% return on investment over 90 days.

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

Gilead Sciences  vs.  Ikena Oncology

Gilead Sciences

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gilead Sciences are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Gilead Sciences exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ikena Oncology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ikena Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gilead Sciences and Ikena Oncology

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

The idea behind Gilead Sciences and Ikena Oncology 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.