Correlation Between Aig Government and Tekla Healthcare
Can any of the company-specific risk be diversified away by investing in both Aig Government 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 Aig Government and Tekla Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aig Government Money and Tekla Healthcare Investors, you can compare the effects of market volatilities on Aig Government 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 Aig Government with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Tekla Healthcare.
Diversification Opportunities for Aig Government and Tekla Healthcare
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aig and Tekla is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money 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 Aig Government 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 Aig Government Money 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 Aig Government i.e., Aig Government and Tekla Healthcare go up and down completely randomly.
Pair Corralation between Aig Government and Tekla Healthcare
Assuming the 90 days horizon Aig Government is expected to generate 16.75 times less return on investment than Tekla Healthcare. But when comparing it to its historical volatility, Aig Government Money is 6.07 times less risky than Tekla Healthcare. It trades about 0.08 of its potential returns per unit of risk. Tekla Healthcare Investors is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,868 in Tekla Healthcare Investors on November 7, 2024 and sell it today you would earn a total of 85.00 from holding Tekla Healthcare Investors or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Aig Government Money vs. Tekla Healthcare Investors
Performance |
| Timeline |
| Aig Government Money |
| Tekla Healthcare Inv |
Aig Government and Tekla Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Tekla Healthcare
The main advantage of trading using opposite Aig Government and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government 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.| Aig Government vs. Vanguard Money Market | Aig Government vs. Hewitt Money Market | Aig Government vs. Gabelli Global Financial | Aig Government vs. Franklin Government Money |
| Tekla Healthcare vs. Vanguard Total Stock | Tekla Healthcare vs. Vanguard 500 Index | Tekla Healthcare vs. Vanguard Total Stock | Tekla Healthcare vs. Vanguard Total Stock |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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