Correlation Between Horizon Spin and Tekla Healthcare

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

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

Diversification Opportunities for Horizon Spin and Tekla Healthcare

0.63

Correlation Coefficient

Horizon Spin  Tekla Healthcare

Poor diversification

The 3 months correlation between Horizon and Tekla is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Spin Off And 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 Horizon Spin 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 Horizon Spin Off And 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 Horizon Spin i.e., Horizon Spin and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Horizon Spin and Tekla Healthcare

Assuming the 90 days horizon Horizon Spin Off And is expected to generate 2.66 times more return on investment than Tekla Healthcare. However, Horizon Spin is 2.66 times more volatile than Tekla Healthcare Opportunities. It trades about 0.09 of its potential returns per unit of risk. Tekla Healthcare Opportunities is currently generating about 0.17 per unit of risk. If you would invest  3,243  in Horizon Spin Off And on December 28, 2024 and sell it today you would earn a total of  417.00  from holding Horizon Spin Off And or generate 12.86% return on investment over 90 days.

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

Horizon Spin Off And  vs.  Tekla Healthcare Opportunities

Horizon Spin Off

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Spin Off And are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Horizon Spin showed solid returns over the last few months and may actually be approaching a breakup point.

Tekla Healthcare Opp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tekla Healthcare Opportunities are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively inconsistent technical indicators, Tekla Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Horizon Spin and Tekla Healthcare

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

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.