Correlation Between Pimco Global and Tekla Healthcare

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

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

Diversification Opportunities for Pimco Global and Tekla Healthcare

0.83

Correlation Coefficient

Pimco Global  Tekla Healthcare

Very poor diversification

The 3 months correlation between Pimco and Tekla is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Global Stocksplus and Tekla Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Healthcare Inv and Pimco Global 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 Pimco Global Stocksplus 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 Inv has no effect on the direction of Pimco Global i.e., Pimco Global and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Pimco Global and Tekla Healthcare

Considering the 90-day investment horizon Pimco Global Stocksplus is expected to generate 1.04 times more return on investment than Tekla Healthcare. However, Pimco Global is 1.04 times more volatile than Tekla Healthcare Investors. It trades about 0.07 of its potential returns per unit of risk. Tekla Healthcare Investors is currently generating about 0.05 per unit of risk. If you would invest  588.00  in Pimco Global Stocksplus on December 2, 2024 and sell it today you would earn a total of  216.00  from holding Pimco Global Stocksplus or generate 36.73% return on investment over 90 days.

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

Pimco Global Stocksplus  vs.  Tekla Healthcare Investors

Pimco Global Stocksplus

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Global Stocksplus are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable technical and fundamental indicators, Pimco Global is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with Pimco Global and Tekla Healthcare

The main advantage of trading using opposite Pimco Global and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Global 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 Pimco Global Stocksplus and Tekla Healthcare Investors 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.