Correlation Between Western Asset and Tekla Life
Can any of the company-specific risk be diversified away by investing in both Western Asset and Tekla Life 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 Western Asset and Tekla Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Tekla Life Sciences, you can compare the effects of market volatilities on Western Asset and Tekla Life 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 Western Asset with a short position of Tekla Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Tekla Life.
Diversification Opportunities for Western Asset and Tekla Life
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Tekla is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Tekla Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Life Sciences and Western Asset 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 Western Asset High are associated (or correlated) with Tekla Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Life Sciences has no effect on the direction of Western Asset i.e., Western Asset and Tekla Life go up and down completely randomly.
Pair Corralation between Western Asset and Tekla Life
Considering the 90-day investment horizon Western Asset is expected to generate 1.47 times less return on investment than Tekla Life. But when comparing it to its historical volatility, Western Asset High is 1.99 times less risky than Tekla Life. It trades about 0.08 of its potential returns per unit of risk. Tekla Life Sciences is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,236 in Tekla Life Sciences on August 27, 2024 and sell it today you would earn a total of 143.00 from holding Tekla Life Sciences or generate 11.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Tekla Life Sciences
Performance |
| Timeline |
| Western Asset High |
| Tekla Life Sciences |
Western Asset and Tekla Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Tekla Life
The main advantage of trading using opposite Western Asset and Tekla Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Tekla Life 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 Life will offset losses from the drop in Tekla Life's long position.| Western Asset vs. Western Asset Global | Western Asset vs. Western Asset High | Western Asset vs. Voya Global Advantage | Western Asset vs. Voya Global Equity |
| Tekla Life vs. Tekla World Healthcare | Tekla Life vs. Tekla Healthcare Opportunities | Tekla Life vs. Royce Value Closed | Tekla Life vs. John Hancock Financial |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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