Correlation Between Tekla World and Blackrock Health

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

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

Diversification Opportunities for Tekla World and Blackrock Health

-0.01

Correlation Coefficient

Tekla World  Blackrock Health

Good diversification

The 3 months correlation between Tekla and Blackrock is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Tekla World Healthcare and Blackrock Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Health Sciences and Tekla World 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 World Healthcare are associated (or correlated) with Blackrock Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Health Sciences has no effect on the direction of Tekla World i.e., Tekla World and Blackrock Health go up and down completely randomly.

Pair Corralation between Tekla World and Blackrock Health

Considering the 90-day investment horizon Tekla World Healthcare is expected to generate 0.92 times more return on investment than Blackrock Health. However, Tekla World Healthcare is 1.09 times less risky than Blackrock Health. It trades about 0.24 of its potential returns per unit of risk. Blackrock Health Sciences is currently generating about -0.1 per unit of risk. If you would invest  1,067  in Tekla World Healthcare on December 20, 2024 and sell it today you would earn a total of  126.00  from holding Tekla World Healthcare or generate 11.81% return on investment over 90 days.

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

Tekla World Healthcare  vs.  Blackrock Health Sciences

Tekla World Healthcare

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tekla World Healthcare are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly inconsistent technical indicators, Tekla World may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Blackrock Health Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Health Sciences has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Blackrock Health 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 World and Blackrock Health

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

The idea behind Tekla World Healthcare and Blackrock Health Sciences 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.