Correlation Between Flaherty Crumrine and Tekla World

Can any of the company-specific risk be diversified away by investing in both Flaherty Crumrine 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 Crumrine 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 Crumrine Preferred and Tekla World Healthcare, you can compare the effects of market volatilities on Flaherty Crumrine 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 Crumrine with a short position of Tekla World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flaherty Crumrine and Tekla World.

Diversification Opportunities for Flaherty Crumrine and Tekla World

0.64

Correlation Coefficient

Flaherty Crumrine  Tekla World

Poor diversification

The 3 months correlation between Flaherty and Tekla is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty Crumrine Preferred 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 Crumrine 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 Crumrine Preferred 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 Crumrine i.e., Flaherty Crumrine and Tekla World go up and down completely randomly.

Pair Corralation between Flaherty Crumrine and Tekla World

Considering the 90-day investment horizon Flaherty Crumrine Preferred is expected to generate 1.02 times more return on investment than Tekla World. However, Flaherty Crumrine is 1.02 times more volatile than Tekla World Healthcare. It trades about 0.04 of its potential returns per unit of risk. Tekla World Healthcare is currently generating about 0.0 per unit of risk. If you would invest  1,344  in Flaherty Crumrine Preferred on September 3, 2024 and sell it today you would earn a total of  240.00  from holding Flaherty Crumrine Preferred or generate 17.86% return on investment over 90 days.

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

Flaherty Crumrine Preferred  vs.  Tekla World Healthcare

Flaherty Crumrine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flaherty Crumrine Preferred are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, Flaherty Crumrine is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Flaherty Crumrine and Tekla World

The main advantage of trading using opposite Flaherty Crumrine and Tekla World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flaherty Crumrine 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 Crumrine Preferred 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.