Correlation Between Tekla Life and Western Asset
Can any of the company-specific risk be diversified away by investing in both Tekla Life and Western Asset 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 Western Asset 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 Western Asset Investment, you can compare the effects of market volatilities on Tekla Life and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Life and Western Asset.
Diversification Opportunities for Tekla Life and Western Asset
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tekla and Western is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Life Sciences and Western Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Investment 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Investment has no effect on the direction of Tekla Life i.e., Tekla Life and Western Asset go up and down completely randomly.
Pair Corralation between Tekla Life and Western Asset
Considering the 90-day investment horizon Tekla Life Sciences is expected to generate 1.86 times more return on investment than Western Asset. However, Tekla Life is 1.86 times more volatile than Western Asset Investment. It trades about 0.03 of its potential returns per unit of risk. Western Asset Investment is currently generating about 0.03 per unit of risk. If you would invest 1,187 in Tekla Life Sciences on August 28, 2024 and sell it today you would earn a total of 192.00 from holding Tekla Life Sciences or generate 16.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tekla Life Sciences vs. Western Asset Investment
Performance |
| Timeline |
| Tekla Life Sciences |
| Western Asset Investment |
Tekla Life and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tekla Life and Western Asset
The main advantage of trading using opposite Tekla Life and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Life position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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