Correlation Between Tekla Healthcare and Nationwide Bond

Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare and Nationwide Bond 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 Nationwide Bond 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 Nationwide Bond Fund, you can compare the effects of market volatilities on Tekla Healthcare and Nationwide Bond 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 Nationwide Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Nationwide Bond.

Diversification Opportunities for Tekla Healthcare and Nationwide Bond

0.3

Correlation Coefficient

Tekla Healthcare  Nationwide Bond

Weak diversification

The 3 months correlation between Tekla and Nationwide is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and Nationwide Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Bond 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 Nationwide Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Bond has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Nationwide Bond go up and down completely randomly.

Pair Corralation between Tekla Healthcare and Nationwide Bond

Assuming the 90 days horizon Tekla Healthcare Investors is expected to under-perform the Nationwide Bond. In addition to that, Tekla Healthcare is 4.7 times more volatile than Nationwide Bond Fund. It trades about -0.01 of its total potential returns per unit of risk. Nationwide Bond Fund is currently generating about 0.11 per unit of volatility. If you would invest  801.00  in Nationwide Bond Fund on December 22, 2024 and sell it today you would earn a total of  12.00  from holding Nationwide Bond Fund or generate 1.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tekla Healthcare Investors  vs.  Nationwide Bond Fund

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.

Nationwide Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Bond Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide Bond 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 Healthcare and Nationwide Bond

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

The idea behind Tekla Healthcare Investors and Nationwide Bond Fund 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.