Correlation Between Voya Index and Tekla Healthcare

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

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

Diversification Opportunities for Voya Index and Tekla Healthcare

-0.08

Correlation Coefficient

Voya Index  Tekla Healthcare

Good diversification

The 3 months correlation between Voya and Tekla is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Voya Index Solution 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 Voya Index 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 Voya Index Solution 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 Voya Index i.e., Voya Index and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Voya Index and Tekla Healthcare

Assuming the 90 days horizon Voya Index Solution is expected to under-perform the Tekla Healthcare. But the mutual fund apears to be less risky and, when comparing its historical volatility, Voya Index Solution is 1.1 times less risky than Tekla Healthcare. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Tekla Healthcare Investors is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,924  in Tekla Healthcare Investors on October 11, 2024 and sell it today you would lose (44.00) from holding Tekla Healthcare Investors or give up 2.29% of portfolio value over 90 days.

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

Voya Index Solution  vs.  Tekla Healthcare Investors

Voya Index Solution

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Index Solution has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Voya Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 Voya Index and Tekla Healthcare

The main advantage of trading using opposite Voya Index and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Index 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 Voya Index Solution 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.