Correlation Between Tekla Healthcare and Flaherty Crumrine
Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare and Flaherty Crumrine 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 Healthcare and Flaherty Crumrine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tekla Healthcare Opportunities and Flaherty Crumrine Preferredome, you can compare the effects of market volatilities on Tekla Healthcare and Flaherty Crumrine 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 Healthcare with a short position of Flaherty Crumrine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Flaherty Crumrine.
Diversification Opportunities for Tekla Healthcare and Flaherty Crumrine
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tekla and Flaherty is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Opportunities and Flaherty Crumrine Preferredome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flaherty Crumrine and Tekla Healthcare 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 Healthcare Opportunities are associated (or correlated) with Flaherty Crumrine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flaherty Crumrine has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Flaherty Crumrine go up and down completely randomly.
Pair Corralation between Tekla Healthcare and Flaherty Crumrine
Considering the 90-day investment horizon Tekla Healthcare Opportunities is expected to under-perform the Flaherty Crumrine. In addition to that, Tekla Healthcare is 2.15 times more volatile than Flaherty Crumrine Preferredome. It trades about -0.04 of its total potential returns per unit of risk. Flaherty Crumrine Preferredome is currently generating about -0.06 per unit of volatility. If you would invest 1,139 in Flaherty Crumrine Preferredome on August 31, 2024 and sell it today you would lose (11.00) from holding Flaherty Crumrine Preferredome or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tekla Healthcare Opportunities vs. Flaherty Crumrine Preferredome
Performance |
| Timeline |
| Tekla Healthcare Opp |
| Flaherty Crumrine |
Tekla Healthcare and Flaherty Crumrine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tekla Healthcare and Flaherty Crumrine
The main advantage of trading using opposite Tekla Healthcare and Flaherty Crumrine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Healthcare position performs unexpectedly, Flaherty Crumrine 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 Flaherty Crumrine will offset losses from the drop in Flaherty Crumrine's long position.| Tekla Healthcare vs. MFS Investment Grade | Tekla Healthcare vs. Eaton Vance Municipal | Tekla Healthcare vs. DTF Tax Free | Tekla Healthcare vs. HUMANA INC |
| Flaherty Crumrine vs. MFS Investment Grade | Flaherty Crumrine vs. Eaton Vance Municipal | Flaherty Crumrine vs. DTF Tax Free | Flaherty Crumrine vs. HUMANA INC |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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