Correlation Between Ultrashort International and Tekla Healthcare

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

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

Diversification Opportunities for Ultrashort International and Tekla Healthcare

-0.72

Correlation Coefficient

Ultrashort International  Tekla Healthcare

Pay attention - limited upside

The 3 months correlation between Ultrashort and Tekla is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ultrashort International Profu 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 Ultrashort International 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 Ultrashort International Profund 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 Ultrashort International i.e., Ultrashort International and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Ultrashort International and Tekla Healthcare

Assuming the 90 days horizon Ultrashort International Profund is expected to generate 1.6 times more return on investment than Tekla Healthcare. However, Ultrashort International is 1.6 times more volatile than Tekla Healthcare Investors. It trades about 0.14 of its potential returns per unit of risk. Tekla Healthcare Investors is currently generating about -0.14 per unit of risk. If you would invest  1,735  in Ultrashort International Profund on October 10, 2024 and sell it today you would earn a total of  78.00  from holding Ultrashort International Profund or generate 4.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Ultrashort International Profu  vs.  Tekla Healthcare Investors

Ultrashort International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrashort International Profund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ultrashort International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tekla Healthcare Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla Healthcare Investors has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Ultrashort International and Tekla Healthcare

The main advantage of trading using opposite Ultrashort International and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultrashort International 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 Ultrashort International Profund 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 Stocks Directory module to find actively traded stocks across global markets.