Correlation Between Tekla Healthcare and Tekla World
Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare and Tekla World 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 Tekla World 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 Tekla World Healthcare, you can compare the effects of market volatilities on Tekla Healthcare and Tekla World 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 Tekla World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Tekla World.
Diversification Opportunities for Tekla Healthcare and Tekla World
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tekla and Tekla is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Opportunities and Tekla World Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla World Healthcare 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 Tekla World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla World Healthcare has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Tekla World go up and down completely randomly.
Pair Corralation between Tekla Healthcare and Tekla World
Considering the 90-day investment horizon Tekla Healthcare Opportunities is expected to generate 0.87 times more return on investment than Tekla World. However, Tekla Healthcare Opportunities is 1.15 times less risky than Tekla World. It trades about 0.04 of its potential returns per unit of risk. Tekla World Healthcare is currently generating about 0.0 per unit of risk. If you would invest 1,717 in Tekla Healthcare Opportunities on August 24, 2024 and sell it today you would earn a total of 266.00 from holding Tekla Healthcare Opportunities or generate 15.49% 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. Tekla World Healthcare
Performance |
| Timeline |
| Tekla Healthcare Opp |
| Tekla World Healthcare |
Tekla Healthcare and Tekla World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tekla Healthcare and Tekla World
The main advantage of trading using opposite Tekla Healthcare and Tekla World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Healthcare position performs unexpectedly, Tekla World 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 World will offset losses from the drop in Tekla World's long position.| Tekla Healthcare vs. MFS Investment Grade | Tekla Healthcare vs. Eaton Vance National | Tekla Healthcare vs. Blackrock Muniyield Quality | Tekla Healthcare vs. Munivest Fund |
| Tekla World vs. Vanguard Total Stock | Tekla World vs. Vanguard 500 Index | Tekla World vs. Vanguard Total Stock | Tekla World 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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