Correlation Between Gilead Sciences and L Brands

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Can any of the company-specific risk be diversified away by investing in both Gilead Sciences and L Brands 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 L Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gilead Sciences and L Brands, you can compare the effects of market volatilities on Gilead Sciences and L Brands 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 L Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilead Sciences and L Brands.

Diversification Opportunities for Gilead Sciences and L Brands

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Gilead and L Brands is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and L Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Brands 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 L Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Brands has no effect on the direction of Gilead Sciences i.e., Gilead Sciences and L Brands go up and down completely randomly.

Pair Corralation between Gilead Sciences and L Brands

If you would invest  5,751  in Gilead Sciences on December 29, 2023 and sell it today you would earn a total of  1,574  from holding Gilead Sciences or generate 27.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Gilead Sciences  vs.  L Brands

 Performance 
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Gilead Sciences 

Risk-Adjusted Performance

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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 sluggish 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.
L Brands 

Risk-Adjusted Performance

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Over the last 90 days L Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, L Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gilead Sciences and L Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gilead Sciences and L Brands

The main advantage of trading using opposite Gilead Sciences and L Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gilead Sciences position performs unexpectedly, L Brands 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 L Brands will offset losses from the drop in L Brands' long position.
The idea behind Gilead Sciences and L Brands 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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