Correlation Between American Century and Tekla Healthcare
Can any of the company-specific risk be diversified away by investing in both American Century 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 American Century and Tekla Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century One and Tekla Healthcare Investors, you can compare the effects of market volatilities on American Century 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 American Century with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Tekla Healthcare.
Diversification Opportunities for American Century and Tekla Healthcare
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Tekla is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding American Century One and Tekla Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Healthcare Inv and American Century 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 American Century One 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 Inv has no effect on the direction of American Century i.e., American Century and Tekla Healthcare go up and down completely randomly.
Pair Corralation between American Century and Tekla Healthcare
Assuming the 90 days horizon American Century One is expected to generate 0.91 times more return on investment than Tekla Healthcare. However, American Century One is 1.09 times less risky than Tekla Healthcare. It trades about 0.16 of its potential returns per unit of risk. Tekla Healthcare Investors is currently generating about -0.02 per unit of risk. If you would invest 1,114 in American Century One on October 24, 2024 and sell it today you would earn a total of 26.00 from holding American Century One or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
American Century One vs. Tekla Healthcare Investors
Performance |
| Timeline |
| American Century One |
| Tekla Healthcare Inv |
American Century and Tekla Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Tekla Healthcare
The main advantage of trading using opposite American Century and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century 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.| American Century vs. Tekla Healthcare Investors | American Century vs. Alger Health Sciences | American Century vs. Baillie Gifford Health | American Century vs. Invesco Global Health |
| Tekla Healthcare vs. Fidelity Sai Convertible | Tekla Healthcare vs. Lord Abbett Convertible | Tekla Healthcare vs. Calamos Dynamic Convertible | Tekla Healthcare vs. Virtus Convertible |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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