Correlation Between Tekla Healthcare and Gabelli Healthcare

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

Diversification Opportunities for Tekla Healthcare and Gabelli Healthcare

0.77

Correlation Coefficient

Tekla Healthcare  Gabelli Healthcare

Poor diversification

The 3 months correlation between Tekla and Gabelli is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and The Gabelli Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Gabelli Healthcare 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 Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Gabelli Healthcare has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Gabelli Healthcare go up and down completely randomly.

Pair Corralation between Tekla Healthcare and Gabelli Healthcare

Considering the 90-day investment horizon Tekla Healthcare Investors is expected to generate 1.04 times more return on investment than Gabelli Healthcare. However, Tekla Healthcare is 1.04 times more volatile than The Gabelli Healthcare. It trades about 0.09 of its potential returns per unit of risk. The Gabelli Healthcare is currently generating about 0.07 per unit of risk. If you would invest  1,568  in Tekla Healthcare Investors on December 29, 2024 and sell it today you would earn a total of  82.00  from holding Tekla Healthcare Investors or generate 5.23% 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.  The Gabelli Healthcare

Tekla Healthcare Inv

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tekla Healthcare Investors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. 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.

The Gabelli Healthcare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Healthcare are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gabelli Healthcare 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 Gabelli Healthcare

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

The idea behind Tekla Healthcare Investors and The Gabelli Healthcare 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.