Correlation Between Baron Health and Tekla Healthcare
Can any of the company-specific risk be diversified away by investing in both Baron Health 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 Baron Health and Tekla Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Health Care and Tekla Healthcare Investors, you can compare the effects of market volatilities on Baron Health 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 Baron Health with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Health and Tekla Healthcare.
Diversification Opportunities for Baron Health and Tekla Healthcare
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baron and Tekla is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Baron Health Care 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 Baron Health 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 Baron Health Care 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 Baron Health i.e., Baron Health and Tekla Healthcare go up and down completely randomly.
Pair Corralation between Baron Health and Tekla Healthcare
Assuming the 90 days horizon Baron Health Care is expected to generate 0.93 times more return on investment than Tekla Healthcare. However, Baron Health Care is 1.07 times less risky than Tekla Healthcare. It trades about -0.13 of its potential returns per unit of risk. Tekla Healthcare Investors is currently generating about -0.13 per unit of risk. If you would invest 2,033 in Baron Health Care on October 10, 2024 and sell it today you would lose (52.00) from holding Baron Health Care or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Health Care vs. Tekla Healthcare Investors
Performance |
| Timeline |
| Baron Health Care |
| Tekla Healthcare Inv |
Baron Health and Tekla Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Health and Tekla Healthcare
The main advantage of trading using opposite Baron Health and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Health 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.| Baron Health vs. Tiaa Cref Real Estate | Baron Health vs. Baron Real Estate | Baron Health vs. Pender Real Estate | Baron Health vs. Redwood Real Estate |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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