Correlation Between Tekla Healthcare and Blackrock Muni

Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare and Blackrock Muni 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 Blackrock Muni 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 Blackrock Muni Intermediate, you can compare the effects of market volatilities on Tekla Healthcare and Blackrock Muni 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 Blackrock Muni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Blackrock Muni.

Diversification Opportunities for Tekla Healthcare and Blackrock Muni

0.82

Correlation Coefficient

Tekla Healthcare  Blackrock Muni

Very poor diversification

The 3 months correlation between Tekla and Blackrock is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and Blackrock Muni Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muni Inter 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 Blackrock Muni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muni Inter has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Blackrock Muni go up and down completely randomly.

Pair Corralation between Tekla Healthcare and Blackrock Muni

Considering the 90-day investment horizon Tekla Healthcare Investors is expected to generate 4.71 times more return on investment than Blackrock Muni. However, Tekla Healthcare is 4.71 times more volatile than Blackrock Muni Intermediate. It trades about 0.17 of its potential returns per unit of risk. Blackrock Muni Intermediate is currently generating about 0.11 per unit of risk. If you would invest  1,687  in Tekla Healthcare Investors on June 22, 2024 and sell it today you would earn a total of  193.00  from holding Tekla Healthcare Investors or generate 11.44% return on investment over 90 days.

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

Tekla Healthcare Investors  vs.  Blackrock Muni Intermediate

Tekla Healthcare Inv

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tekla Healthcare Investors are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Tekla Healthcare may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Blackrock Muni Inter

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muni Intermediate are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Blackrock Muni is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Tekla Healthcare and Blackrock Muni

The main advantage of trading using opposite Tekla Healthcare and Blackrock Muni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Healthcare position performs unexpectedly, Blackrock Muni 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 Blackrock Muni will offset losses from the drop in Blackrock Muni's long position.

The idea behind Tekla Healthcare Investors and Blackrock Muni Intermediate 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.