Correlation Between Internet Ultrasector and Tekla Healthcare

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

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

Diversification Opportunities for Internet Ultrasector and Tekla Healthcare

-0.75

Correlation Coefficient

Internet Ultrasector  Tekla Healthcare

Pay attention - limited upside

The 3 months correlation between Internet and Tekla is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Internet Ultrasector Profund 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 Internet Ultrasector 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 Internet Ultrasector Profund 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 Internet Ultrasector i.e., Internet Ultrasector and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Internet Ultrasector and Tekla Healthcare

Assuming the 90 days horizon Internet Ultrasector Profund is expected to generate 1.48 times more return on investment than Tekla Healthcare. However, Internet Ultrasector is 1.48 times more volatile than Tekla Healthcare Opportunities. It trades about 0.21 of its potential returns per unit of risk. Tekla Healthcare Opportunities is currently generating about -0.18 per unit of risk. If you would invest  2,899  in Internet Ultrasector Profund on September 23, 2024 and sell it today you would earn a total of  714.00  from holding Internet Ultrasector Profund or generate 24.63% return on investment over 90 days.

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

Internet Ultrasector Profund  vs.  Tekla Healthcare Opportunities

Internet Ultrasector

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Internet Ultrasector Profund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Internet Ultrasector showed solid returns over the last few months and may actually be approaching a breakup point.

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 inconsistent performance in the last few months, the Fund's technical indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the fund retail investors.

Pair Trading with Internet Ultrasector and Tekla Healthcare

The main advantage of trading using opposite Internet Ultrasector and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Internet Ultrasector 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 Internet Ultrasector Profund 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.