Correlation Between Bruce Fund and Tekla Healthcare

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

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

Diversification Opportunities for Bruce Fund and Tekla Healthcare

0.76

Correlation Coefficient

Bruce Fund  Tekla Healthcare

Poor diversification

The 3 months correlation between Bruce and Tekla is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bruce Fund Bruce 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 Bruce Fund 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 Bruce Fund Bruce 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 Bruce Fund i.e., Bruce Fund and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Bruce Fund and Tekla Healthcare

Assuming the 90 days horizon Bruce Fund is expected to generate 3.21 times less return on investment than Tekla Healthcare. But when comparing it to its historical volatility, Bruce Fund Bruce is 1.62 times less risky than Tekla Healthcare. It trades about 0.08 of its potential returns per unit of risk. Tekla Healthcare Opportunities is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,846  in Tekla Healthcare Opportunities on December 28, 2024 and sell it today you would earn a total of  184.00  from holding Tekla Healthcare Opportunities or generate 9.97% return on investment over 90 days.

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

Bruce Fund Bruce  vs.  Tekla Healthcare Opportunities

Bruce Fund Bruce

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bruce Fund Bruce are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Bruce Fund 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

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tekla Healthcare Opportunities are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively inconsistent technical indicators, Tekla Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bruce Fund and Tekla Healthcare

The main advantage of trading using opposite Bruce Fund and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bruce Fund 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 Bruce Fund Bruce 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.