Correlation Between Tekla World and Tekla Healthcare
Can any of the company-specific risk be diversified away by investing in both Tekla World 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 Tekla World and Tekla Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tekla World Healthcare and Tekla Healthcare Investors, you can compare the effects of market volatilities on Tekla World 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 Tekla World with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla World and Tekla Healthcare.
Diversification Opportunities for Tekla World and Tekla Healthcare
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tekla and Tekla is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tekla World Healthcare 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 Tekla World 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 World Healthcare 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 Tekla World i.e., Tekla World and Tekla Healthcare go up and down completely randomly.
Pair Corralation between Tekla World and Tekla Healthcare
Considering the 90-day investment horizon Tekla World Healthcare is expected to generate 0.85 times more return on investment than Tekla Healthcare. However, Tekla World Healthcare is 1.17 times less risky than Tekla Healthcare. It trades about -0.17 of its potential returns per unit of risk. Tekla Healthcare Investors is currently generating about -0.19 per unit of risk. If you would invest 1,245 in Tekla World Healthcare on August 27, 2024 and sell it today you would lose (52.00) from holding Tekla World Healthcare or give up 4.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tekla World Healthcare vs. Tekla Healthcare Investors
Performance |
| Timeline |
| Tekla World Healthcare |
| Tekla Healthcare Inv |
Tekla World and Tekla Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tekla World and Tekla Healthcare
The main advantage of trading using opposite Tekla World and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla World 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.| Tekla World vs. Vanguard Total Stock | Tekla World vs. Vanguard 500 Index | Tekla World vs. Vanguard Total Stock | Tekla World vs. Vanguard Total Stock |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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