Correlation Between Tekla Healthcare and Blackrock International

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

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

Diversification Opportunities for Tekla Healthcare and Blackrock International

0.34

Correlation Coefficient

Tekla Healthcare  Blackrock International

Weak diversification

The 3 months correlation between Tekla and Blackrock is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and Blackrock International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock International and Tekla Healthcare 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 Tekla Healthcare Investors are associated (or correlated) with Blackrock International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock International has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Blackrock International go up and down completely randomly.

Pair Corralation between Tekla Healthcare and Blackrock International

Considering the 90-day investment horizon Tekla Healthcare is expected to generate 2.19 times less return on investment than Blackrock International. In addition to that, Tekla Healthcare is 1.06 times more volatile than Blackrock International Growth. It trades about 0.02 of its total potential returns per unit of risk. Blackrock International Growth is currently generating about 0.05 per unit of volatility. If you would invest  447.00  in Blackrock International Growth on September 3, 2024 and sell it today you would earn a total of  110.00  from holding Blackrock International Growth or generate 24.61% return on investment over 90 days.

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

Tekla Healthcare Investors  vs.  Blackrock International Growth

Tekla Healthcare Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla Healthcare Investors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Blackrock International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tekla Healthcare and Blackrock International

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

The idea behind Tekla Healthcare Investors and Blackrock International Growth 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.