Correlation Between Federated Kaufmann and Tekla Healthcare
Can any of the company-specific risk be diversified away by investing in both Federated Kaufmann 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 Federated Kaufmann and Tekla Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Kaufmann Small and Tekla Healthcare Opportunities, you can compare the effects of market volatilities on Federated Kaufmann 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 Federated Kaufmann with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Kaufmann and Tekla Healthcare.
Diversification Opportunities for Federated Kaufmann and Tekla Healthcare
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Federated and Tekla is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Federated Kaufmann Small 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 Federated Kaufmann 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 Federated Kaufmann Small 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 Federated Kaufmann i.e., Federated Kaufmann and Tekla Healthcare go up and down completely randomly.
Pair Corralation between Federated Kaufmann and Tekla Healthcare
Assuming the 90 days horizon Federated Kaufmann Small is expected to generate 1.17 times more return on investment than Tekla Healthcare. However, Federated Kaufmann is 1.17 times more volatile than Tekla Healthcare Opportunities. It trades about 0.09 of its potential returns per unit of risk. Tekla Healthcare Opportunities is currently generating about 0.07 per unit of risk. If you would invest 4,942 in Federated Kaufmann Small on September 1, 2024 and sell it today you would earn a total of 682.00 from holding Federated Kaufmann Small or generate 13.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Federated Kaufmann Small vs. Tekla Healthcare Opportunities
Performance |
| Timeline |
| Federated Kaufmann Small |
| Tekla Healthcare Opp |
Federated Kaufmann and Tekla Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Kaufmann and Tekla Healthcare
The main advantage of trading using opposite Federated Kaufmann and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Kaufmann 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.| Federated Kaufmann vs. Federated Emerging Market | Federated Kaufmann vs. Federated Mdt All | Federated Kaufmann vs. Federated Mdt Balanced | Federated Kaufmann vs. Federated Global Allocation |
| Tekla Healthcare vs. Tekla Healthcare Investors | Tekla Healthcare vs. Tekla Life Sciences | Tekla Healthcare vs. Cohen Steers Reit | Tekla Healthcare vs. XAI Octagon Floating |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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