Correlation Between Tekla Life and Federated Premier
Can any of the company-specific risk be diversified away by investing in both Tekla Life and Federated Premier 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 Life and Federated Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tekla Life Sciences and Federated Premier Municipal, you can compare the effects of market volatilities on Tekla Life and Federated Premier 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 Life with a short position of Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Life and Federated Premier.
Diversification Opportunities for Tekla Life and Federated Premier
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tekla and Federated is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Life Sciences and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier and Tekla Life 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 Life Sciences are associated (or correlated) with Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Tekla Life i.e., Tekla Life and Federated Premier go up and down completely randomly.
Pair Corralation between Tekla Life and Federated Premier
Considering the 90-day investment horizon Tekla Life Sciences is expected to generate 1.8 times more return on investment than Federated Premier. However, Tekla Life is 1.8 times more volatile than Federated Premier Municipal. It trades about -0.01 of its potential returns per unit of risk. Federated Premier Municipal is currently generating about -0.14 per unit of risk. If you would invest 1,439 in Tekla Life Sciences on September 3, 2024 and sell it today you would lose (13.00) from holding Tekla Life Sciences or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tekla Life Sciences vs. Federated Premier Municipal
Performance |
| Timeline |
| Tekla Life Sciences |
| Federated Premier |
Tekla Life and Federated Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tekla Life and Federated Premier
The main advantage of trading using opposite Tekla Life and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Life position performs unexpectedly, Federated Premier 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 Federated Premier will offset losses from the drop in Federated Premier's long position.| Tekla Life vs. Tekla World Healthcare | Tekla Life vs. Tekla Healthcare Opportunities | Tekla Life vs. Royce Value Closed | Tekla Life vs. John Hancock Financial |
| Federated Premier vs. Tekla Healthcare Investors | Federated Premier vs. Tekla Life Sciences | Federated Premier vs. Cohen Steers Reit | Federated Premier 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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