Correlation Between Tekla Healthcare and Gabelli Utility

Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare and Gabelli Utility 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 Gabelli Utility 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 Gabelli Utility Closed, you can compare the effects of market volatilities on Tekla Healthcare and Gabelli Utility 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 Gabelli Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Gabelli Utility.

Diversification Opportunities for Tekla Healthcare and Gabelli Utility

-0.21

Correlation Coefficient

Tekla Healthcare  Gabelli Utility

Very good diversification

The 3 months correlation between Tekla and Gabelli is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and Gabelli Utility Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utility Closed 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 Gabelli Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utility Closed has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Gabelli Utility go up and down completely randomly.

Pair Corralation between Tekla Healthcare and Gabelli Utility

Considering the 90-day investment horizon Tekla Healthcare Investors is expected to under-perform the Gabelli Utility. But the stock apears to be less risky and, when comparing its historical volatility, Tekla Healthcare Investors is 1.01 times less risky than Gabelli Utility. The stock trades about -0.06 of its potential returns per unit of risk. The Gabelli Utility Closed is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  533.00  in Gabelli Utility Closed on September 12, 2024 and sell it today you would earn a total of  11.00  from holding Gabelli Utility Closed or generate 2.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Tekla Healthcare Investors  vs.  Gabelli Utility Closed

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 fairly strong basic indicators, Tekla Healthcare is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Gabelli Utility Closed

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Utility Closed are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Gabelli Utility is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tekla Healthcare and Gabelli Utility

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

The idea behind Tekla Healthcare Investors and Gabelli Utility Closed 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.