Correlation Between Tekla Healthcare and Consumer Staples

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

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

Diversification Opportunities for Tekla Healthcare and Consumer Staples

-0.13

Correlation Coefficient

Tekla Healthcare  Consumer Staples

Good diversification

The 3 months correlation between Tekla and Consumer is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por and Tekla Healthcare 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 Healthcare Investors are associated (or correlated) with Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Consumer Staples go up and down completely randomly.

Pair Corralation between Tekla Healthcare and Consumer Staples

Assuming the 90 days horizon Tekla Healthcare Investors is expected to generate 0.92 times more return on investment than Consumer Staples. However, Tekla Healthcare Investors is 1.09 times less risky than Consumer Staples. It trades about -0.01 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about -0.1 per unit of risk. If you would invest  1,847  in Tekla Healthcare Investors on December 20, 2024 and sell it today you would lose (18.00) from holding Tekla Healthcare Investors or give up 0.97% of portfolio value over 90 days.

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

Tekla Healthcare Investors  vs.  Consumer Staples Portfolio

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

Consumer Staples Por

Risk-Adjusted Performance

Very Weak

Over the last 90 days Consumer Staples Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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 Tekla Healthcare and Consumer Staples

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

The idea behind Tekla Healthcare Investors and Consumer Staples Portfolio 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.