Correlation Between Tekla Healthcare and Ishares Municipal
Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare and Ishares Municipal 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 Healthcare and Ishares Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tekla Healthcare Opportunities and Ishares Municipal Bond, you can compare the effects of market volatilities on Tekla Healthcare and Ishares Municipal 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 Healthcare with a short position of Ishares Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Ishares Municipal.
Diversification Opportunities for Tekla Healthcare and Ishares Municipal
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tekla and Ishares is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Opportunities and Ishares Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Municipal Bond and Tekla Healthcare 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 Healthcare Opportunities are associated (or correlated) with Ishares Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Municipal Bond has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Ishares Municipal go up and down completely randomly.
Pair Corralation between Tekla Healthcare and Ishares Municipal
Considering the 90-day investment horizon Tekla Healthcare Opportunities is expected to under-perform the Ishares Municipal. In addition to that, Tekla Healthcare is 4.38 times more volatile than Ishares Municipal Bond. It trades about -0.28 of its total potential returns per unit of risk. Ishares Municipal Bond is currently generating about -0.32 per unit of volatility. If you would invest 1,120 in Ishares Municipal Bond on October 8, 2024 and sell it today you would lose (19.00) from holding Ishares Municipal Bond or give up 1.7% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Tekla Healthcare Opportunities vs. Ishares Municipal Bond
Performance |
Timeline |
Tekla Healthcare Opp |
Ishares Municipal Bond |
Tekla Healthcare and Ishares Municipal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tekla Healthcare and Ishares Municipal
The main advantage of trading using opposite Tekla Healthcare and Ishares Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tekla Healthcare position performs unexpectedly, Ishares Municipal 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 Ishares Municipal will offset losses from the drop in Ishares Municipal's long position.Tekla Healthcare vs. Tekla Healthcare Investors | Tekla Healthcare vs. Tekla Life Sciences | Tekla Healthcare vs. Cohen Steers Reit | Tekla Healthcare vs. XAI Octagon Floating |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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