Correlation Between Flaherty and Tekla World

Can any of the company-specific risk be diversified away by investing in both Flaherty 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 Flaherty and Tekla World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flaherty and Crumrine and Tekla World Healthcare, you can compare the effects of market volatilities on Flaherty 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 Flaherty with a short position of Tekla World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flaherty and Tekla World.

Diversification Opportunities for Flaherty and Tekla World

0.34

Correlation Coefficient

Flaherty  Tekla World

Weak diversification

The 3 months correlation between Flaherty and Tekla is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty and Crumrine 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 Flaherty 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 Flaherty and Crumrine 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 Flaherty i.e., Flaherty and Tekla World go up and down completely randomly.

Pair Corralation between Flaherty and Tekla World

Considering the 90-day investment horizon Flaherty and Crumrine is expected to generate 0.74 times more return on investment than Tekla World. However, Flaherty and Crumrine is 1.35 times less risky than Tekla World. It trades about 0.15 of its potential returns per unit of risk. Tekla World Healthcare is currently generating about 0.1 per unit of risk. If you would invest  1,596  in Flaherty and Crumrine on August 14, 2024 and sell it today you would earn a total of  456.00  from holding Flaherty and Crumrine or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Flaherty and Crumrine  vs.  Tekla World Healthcare

Flaherty and Crumrine

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Flaherty and Crumrine are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Flaherty may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Tekla World Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla World Healthcare has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable technical indicators, Tekla World is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Flaherty and Tekla World

The main advantage of trading using opposite Flaherty and Tekla World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flaherty 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.

The idea behind Flaherty and Crumrine and Tekla World Healthcare pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.