Correlation Between Gabelli Asset and Tekla Healthcare

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

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

Diversification Opportunities for Gabelli Asset and Tekla Healthcare

-0.43

Correlation Coefficient

Gabelli Asset  Tekla Healthcare

Very good diversification

The 3 months correlation between Gabelli and Tekla is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Asset 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 Gabelli Asset 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 The Gabelli Asset 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 Gabelli Asset i.e., Gabelli Asset and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Gabelli Asset and Tekla Healthcare

Assuming the 90 days horizon The Gabelli Asset is expected to generate 0.36 times more return on investment than Tekla Healthcare. However, The Gabelli Asset is 2.81 times less risky than Tekla Healthcare. It trades about 0.13 of its potential returns per unit of risk. Tekla Healthcare Opportunities is currently generating about -0.01 per unit of risk. If you would invest  5,313  in The Gabelli Asset on September 15, 2024 and sell it today you would earn a total of  71.00  from holding The Gabelli Asset or generate 1.34% return on investment over 90 days.

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

The Gabelli Asset  vs.  Tekla Healthcare Opportunities

Gabelli Asset

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Asset are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gabelli Asset is not utilizing all of its potentials. The latest 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 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.

Pair Trading with Gabelli Asset and Tekla Healthcare

The main advantage of trading using opposite Gabelli Asset and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Asset 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 The Gabelli Asset 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.