Correlation Between Tekla Life and Blackrock Muni

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

Diversification Opportunities for Tekla Life and Blackrock Muni

-0.28

Correlation Coefficient

Tekla Life  Blackrock Muni

Very good diversification

The 3 months correlation between Tekla and Blackrock is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Life Sciences 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 Life 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 Life Sciences 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 Life i.e., Tekla Life and Blackrock Muni go up and down completely randomly.

Pair Corralation between Tekla Life and Blackrock Muni

Considering the 90-day investment horizon Tekla Life Sciences is expected to generate 1.47 times more return on investment than Blackrock Muni. However, Tekla Life is 1.47 times more volatile than Blackrock Muni Intermediate. It trades about 0.03 of its potential returns per unit of risk. Blackrock Muni Intermediate is currently generating about 0.02 per unit of risk. If you would invest  1,271  in Tekla Life Sciences on December 28, 2024 and sell it today you would earn a total of  17.00  from holding Tekla Life Sciences or generate 1.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.66%
Values	Daily Returns

Tekla Life Sciences  vs.  Blackrock Muni Intermediate

Tekla Life Sciences

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tekla Life Sciences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Blackrock Muni Inter

Risk-Adjusted Performance

Weak

Over the last 90 days Blackrock Muni Intermediate has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong basic indicators, Blackrock Muni is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Tekla Life and Blackrock Muni

The main advantage of trading using opposite Tekla Life and Blackrock Muni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Life 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 Life Sciences 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.