Correlation Between Nuveen Amt-free and Tekla Healthcare

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

By analyzing existing cross correlation between Nuveen Amt Free Municipal and Tekla Healthcare Investors, you can compare the effects of market volatilities on Nuveen Amt-free and Tekla Healthcare 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 Nuveen Amt-free with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Amt-free and Tekla Healthcare.

Diversification Opportunities for Nuveen Amt-free and Tekla Healthcare

0.85

Correlation Coefficient

Nuveen Amt-free  Tekla Healthcare

Very poor diversification

The 3 months correlation between Nuveen and Tekla is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Amt Free Municipal and Tekla Healthcare Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Healthcare Inv and Nuveen Amt-free 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 Nuveen Amt Free Municipal are associated (or correlated) with Tekla Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Healthcare Inv has no effect on the direction of Nuveen Amt-free i.e., Nuveen Amt-free and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Nuveen Amt-free and Tekla Healthcare

Considering the 90-day investment horizon Nuveen Amt Free Municipal is expected to generate 0.41 times more return on investment than Tekla Healthcare. However, Nuveen Amt Free Municipal is 2.43 times less risky than Tekla Healthcare. It trades about -0.17 of its potential returns per unit of risk. Tekla Healthcare Investors is currently generating about -0.24 per unit of risk. If you would invest  1,390  in Nuveen Amt Free Municipal on October 7, 2024 and sell it today you would lose (24.00) from holding Nuveen Amt Free Municipal or give up 1.73% of portfolio value over 90 days.

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

Nuveen Amt Free Municipal  vs.  Tekla Healthcare Investors

Nuveen Amt Free

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Amt Free Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable basic indicators, Nuveen Amt-free is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tekla Healthcare Inv

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nuveen Amt-free and Tekla Healthcare

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

The idea behind Nuveen Amt Free Municipal and Tekla Healthcare Investors 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.