Correlation Between Tekla Healthcare and American Century
Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare and American Century 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 American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tekla Healthcare Investors and American Century One, you can compare the effects of market volatilities on Tekla Healthcare and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and American Century.
Diversification Opportunities for Tekla Healthcare and American Century
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tekla and American is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and American Century One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century One 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 Investors are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century One has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and American Century go up and down completely randomly.
Pair Corralation between Tekla Healthcare and American Century
Assuming the 90 days horizon Tekla Healthcare Investors is expected to generate 1.32 times more return on investment than American Century. However, Tekla Healthcare is 1.32 times more volatile than American Century One. It trades about 0.27 of its potential returns per unit of risk. American Century One is currently generating about 0.23 per unit of risk. If you would invest 1,853 in Tekla Healthcare Investors on November 3, 2024 and sell it today you would earn a total of 105.00 from holding Tekla Healthcare Investors or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tekla Healthcare Investors vs. American Century One
Performance |
| Timeline |
| Tekla Healthcare Inv |
| American Century One |
Tekla Healthcare and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tekla Healthcare and American Century
The main advantage of trading using opposite Tekla Healthcare and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Healthcare position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Tekla Healthcare vs. Financials Ultrasector Profund | Tekla Healthcare vs. 1919 Financial Services | Tekla Healthcare vs. Blackstone Secured Lending | Tekla Healthcare vs. John Hancock Financial |
| American Century vs. Federated Government Income | American Century vs. Ishares Municipal Bond | American Century vs. Hartford Municipal Short | American Century vs. Franklin Adjustable Government |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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