Correlation Between Tekla Healthcare and Longleaf Partners
Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare and Longleaf Partners 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 Longleaf Partners 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 Longleaf Partners Small Cap, you can compare the effects of market volatilities on Tekla Healthcare and Longleaf Partners 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 Longleaf Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Longleaf Partners.
Diversification Opportunities for Tekla Healthcare and Longleaf Partners
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Tekla and Longleaf is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and Longleaf Partners Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf Partners Small 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 Longleaf Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longleaf Partners Small has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Longleaf Partners go up and down completely randomly.
Pair Corralation between Tekla Healthcare and Longleaf Partners
Assuming the 90 days horizon Tekla Healthcare Investors is expected to generate 1.32 times more return on investment than Longleaf Partners. However, Tekla Healthcare is 1.32 times more volatile than Longleaf Partners Small Cap. It trades about 0.27 of its potential returns per unit of risk. Longleaf Partners Small Cap is currently generating about 0.13 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tekla Healthcare Investors vs. Longleaf Partners Small Cap
Performance |
| Timeline |
| Tekla Healthcare Inv |
| Longleaf Partners Small |
Tekla Healthcare and Longleaf Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tekla Healthcare and Longleaf Partners
The main advantage of trading using opposite Tekla Healthcare and Longleaf Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Healthcare position performs unexpectedly, Longleaf Partners 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 Longleaf Partners will offset losses from the drop in Longleaf Partners' 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 |
| Longleaf Partners vs. Payden High Income | Longleaf Partners vs. Msift High Yield | Longleaf Partners vs. Guggenheim High Yield | Longleaf Partners vs. Six Circles Credit |
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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