Correlation Between Tekla Healthcare and Pimco Corporate

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

Diversification Opportunities for Tekla Healthcare and Pimco Corporate

0.73

Correlation Coefficient

Tekla Healthcare  Pimco Corporate

Poor diversification

The 3 months correlation between Tekla and Pimco is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and Pimco Corporate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Corporate Income 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 Pimco Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Corporate Income has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Pimco Corporate go up and down completely randomly.

Pair Corralation between Tekla Healthcare and Pimco Corporate

Considering the 90-day investment horizon Tekla Healthcare is expected to generate 1.15 times less return on investment than Pimco Corporate. In addition to that, Tekla Healthcare is 1.08 times more volatile than Pimco Corporate Income. It trades about 0.05 of its total potential returns per unit of risk. Pimco Corporate Income is currently generating about 0.07 per unit of volatility. If you would invest  1,032  in Pimco Corporate Income on December 2, 2024 and sell it today you would earn a total of  333.00  from holding Pimco Corporate Income or generate 32.27% return on investment over 90 days.

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

Tekla Healthcare Investors  vs.  Pimco Corporate Income

Tekla Healthcare Inv

Risk-Adjusted Performance

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.

Pimco Corporate Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pimco Corporate Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy fundamental indicators, Pimco Corporate is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Tekla Healthcare and Pimco Corporate

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

The idea behind Tekla Healthcare Investors and Pimco Corporate Income 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 Commodity Directory module to find actively traded commodities issued by global exchanges.