Correlation Between Jpmorgan Floating and Tekla Healthcare
Can any of the company-specific risk be diversified away by investing in both Jpmorgan Floating and Tekla Healthcare 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 Jpmorgan Floating and Tekla Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jpmorgan Floating Rate and Tekla Healthcare Opportunities, you can compare the effects of market volatilities on Jpmorgan Floating and Tekla Healthcare 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 Jpmorgan Floating with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Floating and Tekla Healthcare.
Diversification Opportunities for Jpmorgan Floating and Tekla Healthcare
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Jpmorgan and Tekla is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Floating Rate and Tekla Healthcare Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Healthcare Opp and Jpmorgan Floating 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 Jpmorgan Floating Rate are associated (or correlated) with Tekla Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Healthcare Opp has no effect on the direction of Jpmorgan Floating i.e., Jpmorgan Floating and Tekla Healthcare go up and down completely randomly.
Pair Corralation between Jpmorgan Floating and Tekla Healthcare
Assuming the 90 days horizon Jpmorgan Floating is expected to generate 1.26 times less return on investment than Tekla Healthcare. But when comparing it to its historical volatility, Jpmorgan Floating Rate is 8.13 times less risky than Tekla Healthcare. It trades about 0.31 of its potential returns per unit of risk. Tekla Healthcare Opportunities is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,715 in Tekla Healthcare Opportunities on September 2, 2024 and sell it today you would earn a total of 373.00 from holding Tekla Healthcare Opportunities or generate 21.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jpmorgan Floating Rate vs. Tekla Healthcare Opportunities
Performance |
| Timeline |
| Jpmorgan Floating Rate |
| Tekla Healthcare Opp |
Jpmorgan Floating and Tekla Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jpmorgan Floating and Tekla Healthcare
The main advantage of trading using opposite Jpmorgan Floating and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan Floating position performs unexpectedly, Tekla Healthcare 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 Healthcare will offset losses from the drop in Tekla Healthcare's long position.The idea behind Jpmorgan Floating Rate and Tekla Healthcare Opportunities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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