Correlation Between First Trust and Tekla Healthcare
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Tekla Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Specialty and Tekla Healthcare Investors, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Tekla Healthcare.
Diversification Opportunities for First Trust and Tekla Healthcare
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Tekla is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Specialty 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 First Trust 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 First Trust Specialty 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 First Trust i.e., First Trust and Tekla Healthcare go up and down completely randomly.
Pair Corralation between First Trust and Tekla Healthcare
Considering the 90-day investment horizon First Trust Specialty is expected to generate 1.56 times more return on investment than Tekla Healthcare. However, First Trust is 1.56 times more volatile than Tekla Healthcare Investors. It trades about 0.09 of its potential returns per unit of risk. Tekla Healthcare Investors is currently generating about -0.01 per unit of risk. If you would invest 250.00 in First Trust Specialty on September 14, 2024 and sell it today you would earn a total of 180.00 from holding First Trust Specialty or generate 72.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Specialty vs. Tekla Healthcare Investors
Performance |
| Timeline |
| First Trust Specialty |
| Tekla Healthcare Inv |
First Trust and Tekla Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Tekla Healthcare
The main advantage of trading using opposite First Trust and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. MFS High Income | First Trust vs. MFS High Yield | First Trust vs. Blackrock Muniholdings Quality | First Trust vs. MFS Government Markets |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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