Correlation Between Tekla Healthcare and Midcap Fund

Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare and Midcap Fund 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 Midcap Fund 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 Midcap Fund R 4, you can compare the effects of market volatilities on Tekla Healthcare and Midcap Fund 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 Midcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Midcap Fund.

Diversification Opportunities for Tekla Healthcare and Midcap Fund

-0.85

Correlation Coefficient

Tekla Healthcare  Midcap Fund

Pay attention - limited upside

The 3 months correlation between Tekla and Midcap is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and Midcap Fund R 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Fund R 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 Midcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Fund R has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Midcap Fund go up and down completely randomly.

Pair Corralation between Tekla Healthcare and Midcap Fund

If you would invest  4,776  in Midcap Fund R 4 on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Midcap Fund R 4 or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

Tekla Healthcare Investors  vs.  Midcap Fund R 4

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.

Midcap Fund R

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Midcap Fund R 4 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Midcap Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tekla Healthcare and Midcap Fund

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

The idea behind Tekla Healthcare Investors and Midcap Fund R 4 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.