Correlation Between Hartford Healthcare and Tekla Healthcare

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Can any of the company-specific risk be diversified away by investing in both Hartford Healthcare 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 Hartford Healthcare and Tekla Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartford Healthcare Hls and Tekla Healthcare Opportunities, you can compare the effects of market volatilities on Hartford Healthcare 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 Hartford Healthcare with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Healthcare and Tekla Healthcare.

Diversification Opportunities for Hartford Healthcare and Tekla Healthcare

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Hartford and Tekla is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Healthcare Hls 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 Hartford 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 Hartford Healthcare Hls 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 Hartford Healthcare i.e., Hartford Healthcare and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Hartford Healthcare and Tekla Healthcare

Assuming the 90 days horizon Hartford Healthcare is expected to generate 2.73 times less return on investment than Tekla Healthcare. But when comparing it to its historical volatility, Hartford Healthcare Hls is 1.26 times less risky than Tekla Healthcare. It trades about 0.02 of its potential returns per unit of risk. Tekla Healthcare Opportunities is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,702  in Tekla Healthcare Opportunities on September 12, 2024 and sell it today you would earn a total of  301.00  from holding Tekla Healthcare Opportunities or generate 17.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Hartford Healthcare Hls  vs.  Tekla Healthcare Opportunities

 Performance 
       Timeline  
Hartford Healthcare Hls 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hartford Healthcare Hls 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.
Tekla Healthcare Opp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tekla Healthcare Opportunities has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable technical indicators, Tekla Healthcare is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Hartford Healthcare and Tekla Healthcare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hartford Healthcare and Tekla Healthcare

The main advantage of trading using opposite Hartford Healthcare and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Healthcare 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.
The idea behind Hartford Healthcare Hls and Tekla Healthcare Opportunities 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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