Correlation Between Tekla Healthcare and Valic Company

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

Diversification Opportunities for Tekla Healthcare and Valic Company

-0.12

Correlation Coefficient

Tekla Healthcare  Valic Company

Good diversification

The 3 months correlation between Tekla and Valic is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and Valic Company I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valic Company I 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 Valic Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valic Company I has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Valic Company go up and down completely randomly.

Pair Corralation between Tekla Healthcare and Valic Company

Assuming the 90 days horizon Tekla Healthcare Investors is expected to under-perform the Valic Company. In addition to that, Tekla Healthcare is 1.05 times more volatile than Valic Company I. It trades about -0.14 of its total potential returns per unit of risk. Valic Company I is currently generating about -0.14 per unit of volatility. If you would invest  2,177  in Valic Company I on October 9, 2024 and sell it today you would lose (56.00) from holding Valic Company I or give up 2.57% 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.  Valic Company I

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.

Valic Company I

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Valic Company I has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Valic Company 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 Valic Company

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

The idea behind Tekla Healthcare Investors and Valic Company I 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..