Correlation Between Tekla Healthcare and Virtus Senior

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

Diversification Opportunities for Tekla Healthcare and Virtus Senior

-0.83

Correlation Coefficient

Tekla Healthcare  Virtus Senior

Pay attention - limited upside

The 3 months correlation between Tekla and Virtus is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and Virtus Senior Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Senior Floating 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 Virtus Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Senior Floating has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Virtus Senior go up and down completely randomly.

Pair Corralation between Tekla Healthcare and Virtus Senior

Assuming the 90 days horizon Tekla Healthcare Investors is expected to under-perform the Virtus Senior. In addition to that, Tekla Healthcare is 6.03 times more volatile than Virtus Senior Floating. It trades about -0.02 of its total potential returns per unit of risk. Virtus Senior Floating is currently generating about 0.27 per unit of volatility. If you would invest  868.00  in Virtus Senior Floating on October 24, 2024 and sell it today you would earn a total of  6.00  from holding Virtus Senior Floating or generate 0.69% return on investment over 90 days.

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

Tekla Healthcare Investors  vs.  Virtus Senior Floating

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.

Virtus Senior Floating

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Senior Floating are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Senior 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 Virtus Senior

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

The idea behind Tekla Healthcare Investors and Virtus Senior Floating 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.