Correlation Between Gilead Sciences and Expensify

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

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

Diversification Opportunities for Gilead Sciences and Expensify

0.64

Correlation Coefficient

Gilead Sciences  Expensify

Poor diversification

The 3 months correlation between Gilead and Expensify is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and Expensify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expensify 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 Expensify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expensify has no effect on the direction of Gilead Sciences i.e., Gilead Sciences and Expensify go up and down completely randomly.

Pair Corralation between Gilead Sciences and Expensify

Given the investment horizon of 90 days Gilead Sciences is expected to under-perform the Expensify. But the stock apears to be less risky and, when comparing its historical volatility, Gilead Sciences is 5.4 times less risky than Expensify. The stock trades about -0.11 of its potential returns per unit of risk. The Expensify is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  185.00  in Expensify on February 23, 2024 and sell it today you would lose (15.00) from holding Expensify or give up 8.11% of portfolio value over 90 days.

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

Gilead Sciences  vs.  Expensify

Gilead Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Expensify

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Expensify has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Expensify is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gilead Sciences and Expensify

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

The idea behind Gilead Sciences and Expensify 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..