Correlation Between Vanguard Growth and Tekla Life

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

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

Diversification Opportunities for Vanguard Growth and Tekla Life

-0.58

Correlation Coefficient

Vanguard Growth  Tekla Life

Excellent diversification

The 3 months correlation between Vanguard and Tekla is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Growth Index and Tekla Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Life Sciences and Vanguard Growth 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 Vanguard Growth Index are associated (or correlated) with Tekla Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Life Sciences has no effect on the direction of Vanguard Growth i.e., Vanguard Growth and Tekla Life go up and down completely randomly.

Pair Corralation between Vanguard Growth and Tekla Life

Assuming the 90 days horizon Vanguard Growth is expected to generate 7.37 times less return on investment than Tekla Life. But when comparing it to its historical volatility, Vanguard Growth Index is 1.05 times less risky than Tekla Life. It trades about 0.01 of its potential returns per unit of risk. Tekla Life Sciences is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,525  in Tekla Life Sciences on October 26, 2024 and sell it today you would earn a total of  37.00  from holding Tekla Life Sciences or generate 2.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Vanguard Growth Index  vs.  Tekla Life Sciences

Vanguard Growth Index

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Growth Index are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 fund investors. In spite of fairly strong essential indicators, Tekla Life is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Growth and Tekla Life

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

The idea behind Vanguard Growth Index and Tekla Life 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.