Correlation Between Tekla Life and Blackrock Muniyield
Can any of the company-specific risk be diversified away by investing in both Tekla Life and Blackrock Muniyield 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 Blackrock Muniyield 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 Blackrock Muniyield Quality, you can compare the effects of market volatilities on Tekla Life and Blackrock Muniyield 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 Blackrock Muniyield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Life and Blackrock Muniyield.
Diversification Opportunities for Tekla Life and Blackrock Muniyield
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tekla and Blackrock is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Life Sciences and Blackrock Muniyield Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield 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 Blackrock Muniyield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniyield has no effect on the direction of Tekla Life i.e., Tekla Life and Blackrock Muniyield go up and down completely randomly.
Pair Corralation between Tekla Life and Blackrock Muniyield
Considering the 90-day investment horizon Tekla Life Sciences is expected to generate 2.48 times more return on investment than Blackrock Muniyield. However, Tekla Life is 2.48 times more volatile than Blackrock Muniyield Quality. It trades about 0.03 of its potential returns per unit of risk. Blackrock Muniyield Quality is currently generating about 0.04 per unit of risk. If you would invest 1,188 in Tekla Life Sciences on September 3, 2024 and sell it today you would earn a total of 238.00 from holding Tekla Life Sciences or generate 20.03% 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. Blackrock Muniyield Quality
Performance |
| Timeline |
| Tekla Life Sciences |
| Blackrock Muniyield |
Tekla Life and Blackrock Muniyield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tekla Life and Blackrock Muniyield
The main advantage of trading using opposite Tekla Life and Blackrock Muniyield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Life position performs unexpectedly, Blackrock Muniyield 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 Blackrock Muniyield will offset losses from the drop in Blackrock Muniyield'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 |
| Blackrock Muniyield vs. Tekla Healthcare Investors | Blackrock Muniyield vs. Tekla Life Sciences | Blackrock Muniyield vs. Cohen Steers Reit | Blackrock Muniyield 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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