Correlation Between Tekla Healthcare and Goldman Sachs

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

By analyzing existing cross correlation between Tekla Healthcare Opportunities and Goldman Sachs Small, you can compare the effects of market volatilities on Tekla Healthcare and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Goldman Sachs.

Diversification Opportunities for Tekla Healthcare and Goldman Sachs

-0.34

Correlation Coefficient

Tekla Healthcare  Goldman Sachs

Very good diversification

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

Pair Corralation between Tekla Healthcare and Goldman Sachs

Considering the 90-day investment horizon Tekla Healthcare Opportunities is expected to under-perform the Goldman Sachs. But the fund apears to be less risky and, when comparing its historical volatility, Tekla Healthcare Opportunities is 2.1 times less risky than Goldman Sachs. The fund trades about -0.12 of its potential returns per unit of risk. The Goldman Sachs Small is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,215  in Goldman Sachs Small on September 15, 2024 and sell it today you would lose (150.00) from holding Goldman Sachs Small or give up 6.77% of portfolio value over 90 days.

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

Tekla Healthcare Opportunities  vs.  Goldman Sachs Small

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 latest inconsistent performance, the Fund's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the fund retail investors.

Goldman Sachs Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tekla Healthcare and Goldman Sachs

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

The idea behind Tekla Healthcare Opportunities and Goldman Sachs Small 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.