Correlation Between Regional Management and Tekla Healthcare
Can any of the company-specific risk be diversified away by investing in both Regional Management 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 Regional Management and Tekla Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and Tekla Healthcare Investors, you can compare the effects of market volatilities on Regional Management 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 Regional Management with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and Tekla Healthcare.
Diversification Opportunities for Regional Management and Tekla Healthcare
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regional and Tekla is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and Tekla Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Healthcare Inv and Regional Management 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 Regional Management Corp 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 Inv has no effect on the direction of Regional Management i.e., Regional Management and Tekla Healthcare go up and down completely randomly.
Pair Corralation between Regional Management and Tekla Healthcare
Allowing for the 90-day total investment horizon Regional Management Corp is expected to generate 2.28 times more return on investment than Tekla Healthcare. However, Regional Management is 2.28 times more volatile than Tekla Healthcare Investors. It trades about 0.12 of its potential returns per unit of risk. Tekla Healthcare Investors is currently generating about -0.16 per unit of risk. If you would invest 2,883 in Regional Management Corp on August 28, 2024 and sell it today you would earn a total of 210.00 from holding Regional Management Corp or generate 7.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. Tekla Healthcare Investors
Performance |
| Timeline |
| Regional Management Corp |
| Tekla Healthcare Inv |
Regional Management and Tekla Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and Tekla Healthcare
The main advantage of trading using opposite Regional Management and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management 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.| Regional Management vs. SLM Corp Pb | Regional Management vs. FirstCash | Regional Management vs. Navient Corp | Regional Management vs. Orix Corp Ads |
| Tekla Healthcare vs. Tekla Healthcare Opportunities | Tekla Healthcare vs. Eaton Vance Tax | Tekla Healthcare vs. Tekla World Healthcare | Tekla Healthcare vs. Cohen Steers Limited |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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