Correlation Between Blackrock Enhanced and Tekla Life

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

By analyzing existing cross correlation between Blackrock Enhanced Capital and Tekla Life Sciences, you can compare the effects of market volatilities on Blackrock Enhanced and Tekla Life 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 Blackrock Enhanced with a short position of Tekla Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Enhanced and Tekla Life.

Diversification Opportunities for Blackrock Enhanced and Tekla Life

-0.4

Correlation Coefficient

Blackrock Enhanced  Tekla Life

Very good diversification

The 3 months correlation between Blackrock and Tekla is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Capital and Tekla Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Life Sciences and Blackrock Enhanced 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 Blackrock Enhanced Capital are associated (or correlated) with Tekla Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Life Sciences has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and Tekla Life go up and down completely randomly.

Pair Corralation between Blackrock Enhanced and Tekla Life

Considering the 90-day investment horizon Blackrock Enhanced Capital is expected to generate 0.54 times more return on investment than Tekla Life. However, Blackrock Enhanced Capital is 1.86 times less risky than Tekla Life. It trades about 0.06 of its potential returns per unit of risk. Tekla Life Sciences is currently generating about 0.03 per unit of risk. If you would invest  1,584  in Blackrock Enhanced Capital on October 7, 2024 and sell it today you would earn a total of  446.00  from holding Blackrock Enhanced Capital or generate 28.16% return on investment over 90 days.

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

Blackrock Enhanced Capital  vs.  Tekla Life Sciences

Blackrock Enhanced

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Enhanced Capital are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong forward indicators, Blackrock Enhanced is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Tekla Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Tekla Life is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Blackrock Enhanced and Tekla Life

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

The idea behind Blackrock Enhanced Capital and Tekla Life Sciences 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.