Correlation Between Tekla Healthcare and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare and Prudential Jennison 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 Prudential Jennison 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 Prudential Jennison International, you can compare the effects of market volatilities on Tekla Healthcare and Prudential Jennison 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 Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Prudential Jennison.
Diversification Opportunities for Tekla Healthcare and Prudential Jennison
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tekla and Prudential is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Opportunities and Prudential Jennison Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison 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 Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Prudential Jennison go up and down completely randomly.
Pair Corralation between Tekla Healthcare and Prudential Jennison
Considering the 90-day investment horizon Tekla Healthcare is expected to generate 1.64 times less return on investment than Prudential Jennison. But when comparing it to its historical volatility, Tekla Healthcare Opportunities is 1.11 times less risky than Prudential Jennison. It trades about 0.04 of its potential returns per unit of risk. Prudential Jennison International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,278 in Prudential Jennison International on September 14, 2024 and sell it today you would earn a total of 724.00 from holding Prudential Jennison International or generate 31.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tekla Healthcare Opportunities vs. Prudential Jennison Internatio
Performance |
| Timeline |
| Tekla Healthcare Opp |
| Prudential Jennison |
Tekla Healthcare and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tekla Healthcare and Prudential Jennison
The main advantage of trading using opposite Tekla Healthcare and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Healthcare position performs unexpectedly, Prudential Jennison 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 Prudential Jennison will offset losses from the drop in Prudential Jennison's long position.| Tekla Healthcare vs. Tekla Healthcare Investors | Tekla Healthcare vs. Tekla Life Sciences | Tekla Healthcare vs. Cohen Steers Reit | Tekla Healthcare vs. XAI Octagon Floating |
| Prudential Jennison vs. Tekla Healthcare Opportunities | Prudential Jennison vs. Prudential Health Sciences | Prudential Jennison vs. Fidelity Advisor Health | Prudential Jennison vs. Lord Abbett Health |
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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