Correlation Between Income Fund and Tekla Healthcare
Can any of the company-specific risk be diversified away by investing in both Income Fund and Tekla Healthcare 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 Income Fund and Tekla Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Fund Of and Tekla Healthcare Opportunities, you can compare the effects of market volatilities on Income Fund and Tekla Healthcare 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 Income Fund with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Fund and Tekla Healthcare.
Diversification Opportunities for Income Fund and Tekla Healthcare
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Income and Tekla is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Income Fund Of and Tekla Healthcare Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Healthcare Opp and Income Fund 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 Income Fund Of are associated (or correlated) with Tekla Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Healthcare Opp has no effect on the direction of Income Fund i.e., Income Fund and Tekla Healthcare go up and down completely randomly.
Pair Corralation between Income Fund and Tekla Healthcare
Assuming the 90 days horizon Income Fund Of is expected to generate 0.3 times more return on investment than Tekla Healthcare. However, Income Fund Of is 3.29 times less risky than Tekla Healthcare. It trades about 0.08 of its potential returns per unit of risk. Tekla Healthcare Opportunities is currently generating about -0.1 per unit of risk. If you would invest 2,587 in Income Fund Of on August 29, 2024 and sell it today you would earn a total of 21.00 from holding Income Fund Of or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Fund Of vs. Tekla Healthcare Opportunities
Performance |
| Timeline |
| Income Fund |
| Tekla Healthcare Opp |
Income Fund and Tekla Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Fund and Tekla Healthcare
The main advantage of trading using opposite Income Fund and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Fund position performs unexpectedly, Tekla Healthcare 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 Tekla Healthcare will offset losses from the drop in Tekla Healthcare's long position.| Income Fund vs. Tekla Healthcare Opportunities | Income Fund vs. Alger Health Sciences | Income Fund vs. Health Biotchnology Portfolio | Income Fund vs. Health Care Fund |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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