Correlation Between Tekla Life and Pimco New

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

By analyzing existing cross correlation between Tekla Life Sciences and Pimco New York, you can compare the effects of market volatilities on Tekla Life and Pimco New 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 Life with a short position of Pimco New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Life and Pimco New.

Diversification Opportunities for Tekla Life and Pimco New

0.81

Correlation Coefficient

Tekla Life  Pimco New

Very poor diversification

The 3 months correlation between Tekla and Pimco is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Life Sciences and Pimco New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco New York and Tekla Life 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 Life Sciences are associated (or correlated) with Pimco New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco New York has no effect on the direction of Tekla Life i.e., Tekla Life and Pimco New go up and down completely randomly.

Pair Corralation between Tekla Life and Pimco New

Considering the 90-day investment horizon Tekla Life Sciences is expected to under-perform the Pimco New. In addition to that, Tekla Life is 2.1 times more volatile than Pimco New York. It trades about -0.18 of its total potential returns per unit of risk. Pimco New York is currently generating about -0.32 per unit of volatility. If you would invest  790.00  in Pimco New York on October 7, 2024 and sell it today you would lose (35.00) from holding Pimco New York or give up 4.43% of portfolio value over 90 days.

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

Tekla Life Sciences  vs.  Pimco New York

Tekla Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Tekla Life is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pimco New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco New York has generated negative risk-adjusted returns adding no value to fund investors. Despite latest abnormal performance, the Fund's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the mutual fund stockholders.

Pair Trading with Tekla Life and Pimco New

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

The idea behind Tekla Life Sciences and Pimco New York 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.