Correlation Between Flaherty Crumrine and Tekla Healthcare

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

Diversification Opportunities for Flaherty Crumrine and Tekla Healthcare

0.55

Correlation Coefficient

Flaherty Crumrine  Tekla Healthcare

Very weak diversification

The 3 months correlation between Flaherty and Tekla is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty Crumrine Preferred 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 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 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 Flaherty Crumrine i.e., Flaherty Crumrine and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Flaherty Crumrine and Tekla Healthcare

Considering the 90-day investment horizon Flaherty Crumrine Preferred is expected to generate 0.5 times more return on investment than Tekla Healthcare. However, Flaherty Crumrine Preferred is 2.0 times less risky than Tekla Healthcare. It trades about 0.03 of its potential returns per unit of risk. Tekla Healthcare Investors is currently generating about -0.12 per unit of risk. If you would invest  913.00  in Flaherty Crumrine Preferred on September 14, 2024 and sell it today you would earn a total of  8.00  from holding Flaherty Crumrine Preferred or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Flaherty Crumrine Preferred  vs.  Tekla Healthcare Investors

Flaherty Crumrine

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flaherty Crumrine Preferred are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy technical and fundamental indicators, Flaherty Crumrine is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the 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 latest abnormal performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Flaherty Crumrine and Tekla Healthcare

The main advantage of trading using opposite Flaherty Crumrine and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flaherty Crumrine 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 Flaherty Crumrine Preferred 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.