Correlation Between Western Asset and Tekla Healthcare
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Tekla Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Mortgage and Tekla Healthcare Investors, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Tekla Healthcare.
Diversification Opportunities for Western Asset and Tekla Healthcare
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Tekla is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Mortgage 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 Western Asset 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 Western Asset Mortgage 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 Western Asset i.e., Western Asset and Tekla Healthcare go up and down completely randomly.
Pair Corralation between Western Asset and Tekla Healthcare
Considering the 90-day investment horizon Western Asset Mortgage is expected to generate 0.42 times more return on investment than Tekla Healthcare. However, Western Asset Mortgage is 2.38 times less risky than Tekla Healthcare. It trades about 0.1 of its potential returns per unit of risk. Tekla Healthcare Investors is currently generating about -0.19 per unit of risk. If you would invest 1,186 in Western Asset Mortgage on August 27, 2024 and sell it today you would earn a total of 14.00 from holding Western Asset Mortgage or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Mortgage vs. Tekla Healthcare Investors
Performance |
| Timeline |
| Western Asset Mortgage |
| Tekla Healthcare Inv |
Western Asset and Tekla Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Tekla Healthcare
The main advantage of trading using opposite Western Asset and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Western Asset High | Western Asset vs. Pioneer Municipal High | Western Asset vs. Doubleline Income Solutions | Western Asset vs. Doubleline Yield Opportunities |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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