Correlation Between Tekla Healthcare and Ares Dynamic
Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare and Ares Dynamic 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 Tekla Healthcare and Ares Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tekla Healthcare Investors and Ares Dynamic Credit, you can compare the effects of market volatilities on Tekla Healthcare and Ares Dynamic 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 Tekla Healthcare with a short position of Ares Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Ares Dynamic.
Diversification Opportunities for Tekla Healthcare and Ares Dynamic
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tekla and Ares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and Ares Dynamic Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Dynamic Credit and Tekla Healthcare 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 Tekla Healthcare Investors are associated (or correlated) with Ares Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Dynamic Credit has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Ares Dynamic go up and down completely randomly.
Pair Corralation between Tekla Healthcare and Ares Dynamic
Considering the 90-day investment horizon Tekla Healthcare Investors is expected to under-perform the Ares Dynamic. But the stock apears to be less risky and, when comparing its historical volatility, Tekla Healthcare Investors is 1.14 times less risky than Ares Dynamic. The stock trades about -0.41 of its potential returns per unit of risk. The Ares Dynamic Credit is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest 1,411 in Ares Dynamic Credit on January 6, 2025 and sell it today you would lose (133.00) from holding Ares Dynamic Credit or give up 9.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tekla Healthcare Investors vs. Ares Dynamic Credit
Performance |
| Timeline |
| Tekla Healthcare Inv |
| Ares Dynamic Credit |
Tekla Healthcare and Ares Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tekla Healthcare and Ares Dynamic
The main advantage of trading using opposite Tekla Healthcare and Ares Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Healthcare position performs unexpectedly, Ares Dynamic 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 Ares Dynamic will offset losses from the drop in Ares Dynamic's long position.| Tekla Healthcare vs. Tekla Healthcare Opportunities | Tekla Healthcare vs. Eaton Vance Tax | Tekla Healthcare vs. Tekla World Healthcare | Tekla Healthcare vs. Cohen Steers Limited |
| Ares Dynamic vs. Eaton Vance Floating | Ares Dynamic vs. NXG NextGen Infrastructure | Ares Dynamic vs. GAMCO Natural Resources | Ares Dynamic vs. MFS Investment Grade |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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