Correlation Between Global Opportunities and Tekla Healthcare

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

By analyzing existing cross correlation between Global Opportunities Fund and Tekla Healthcare Opportunities, you can compare the effects of market volatilities on Global Opportunities and Tekla Healthcare 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 Global Opportunities with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Opportunities and Tekla Healthcare.

Diversification Opportunities for Global Opportunities and Tekla Healthcare

0.29

Correlation Coefficient

Global Opportunities  Tekla Healthcare

Modest diversification

The 3 months correlation between Global and Tekla is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Global Opportunities Fund and Tekla Healthcare Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Healthcare Opp and Global Opportunities 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 Global Opportunities Fund are associated (or correlated) with Tekla Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Healthcare Opp has no effect on the direction of Global Opportunities i.e., Global Opportunities and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Global Opportunities and Tekla Healthcare

Assuming the 90 days horizon Global Opportunities Fund is expected to generate 0.28 times more return on investment than Tekla Healthcare. However, Global Opportunities Fund is 3.54 times less risky than Tekla Healthcare. It trades about 0.01 of its potential returns per unit of risk. Tekla Healthcare Opportunities is currently generating about -0.14 per unit of risk. If you would invest  1,274  in Global Opportunities Fund on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Global Opportunities Fund or generate 0.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Global Opportunities Fund  vs.  Tekla Healthcare Opportunities

Global Opportunities

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Opportunities Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Global Opportunities is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tekla Healthcare Opp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla Healthcare Opportunities has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable technical indicators, Tekla Healthcare is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Global Opportunities and Tekla Healthcare

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

The idea behind Global Opportunities Fund and Tekla Healthcare Opportunities 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.