Correlation Between Tekla Healthcare and Short-term Government
Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare and Short-term Government 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 Short-term Government 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 Short Term Government Fund, you can compare the effects of market volatilities on Tekla Healthcare and Short-term Government 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 Short-term Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Short-term Government.
Diversification Opportunities for Tekla Healthcare and Short-term Government
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tekla and Short-term is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and Short Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Government 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 Short-term Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Government has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Short-term Government go up and down completely randomly.
Pair Corralation between Tekla Healthcare and Short-term Government
Assuming the 90 days horizon Tekla Healthcare Investors is expected to generate 11.75 times more return on investment than Short-term Government. However, Tekla Healthcare is 11.75 times more volatile than Short Term Government Fund. It trades about 0.23 of its potential returns per unit of risk. Short Term Government Fund is currently generating about 0.07 per unit of risk. If you would invest 1,868 in Tekla Healthcare Investors on November 5, 2024 and sell it today you would earn a total of 85.00 from holding Tekla Healthcare Investors or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Tekla Healthcare Investors vs. Short Term Government Fund
Performance |
| Timeline |
| Tekla Healthcare Inv |
| Short Term Government |
Tekla Healthcare and Short-term Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tekla Healthcare and Short-term Government
The main advantage of trading using opposite Tekla Healthcare and Short-term Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Healthcare position performs unexpectedly, Short-term Government 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 Short-term Government will offset losses from the drop in Short-term Government's long position.| Tekla Healthcare vs. Vanguard Total Stock | Tekla Healthcare vs. Vanguard 500 Index | Tekla Healthcare vs. Vanguard Total Stock | Tekla Healthcare vs. Vanguard Total Stock |
| Short-term Government vs. Tax Managed Large Cap | Short-term Government vs. Pnc Balanced Allocation | Short-term Government vs. Rbc Global Equity | Short-term Government vs. Touchstone Large Cap |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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