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 Total 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

0.54

Correlation Coefficient

Flaherty Crumrine  Tekla World

Very weak diversification

The 3 months correlation between Flaherty and Tekla is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty Crumrine Total 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 Total 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 Total is expected to generate 0.64 times more return on investment than Tekla World. However, Flaherty Crumrine Total is 1.57 times less risky than Tekla World. It trades about 0.04 of its potential returns per unit of risk. Tekla World Healthcare is currently generating about -0.08 per unit of risk. If you would invest  1,649  in Flaherty Crumrine Total on September 2, 2024 and sell it today you would earn a total of  23.00  from holding Flaherty Crumrine Total or generate 1.39% return on investment over 90 days.

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

Flaherty Crumrine Total  vs.  Tekla World Healthcare

Flaherty Crumrine Total

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flaherty Crumrine Total are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential 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 Total 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.