Correlation Between Tekla World and Flaherty

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

By analyzing existing cross correlation between Tekla World Healthcare and Flaherty and Crumrine, you can compare the effects of market volatilities on Tekla World and Flaherty 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 World with a short position of Flaherty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla World and Flaherty.

Diversification Opportunities for Tekla World and Flaherty

0.85

Correlation Coefficient

Tekla World  Flaherty

Very poor diversification

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

Pair Corralation between Tekla World and Flaherty

Considering the 90-day investment horizon Tekla World Healthcare is expected to generate 1.47 times more return on investment than Flaherty. However, Tekla World is 1.47 times more volatile than Flaherty and Crumrine. It trades about 0.17 of its potential returns per unit of risk. Flaherty and Crumrine is currently generating about 0.13 per unit of risk. If you would invest  1,073  in Tekla World Healthcare on December 28, 2024 and sell it today you would earn a total of  83.00  from holding Tekla World Healthcare or generate 7.74% return on investment over 90 days.

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

Tekla World Healthcare  vs.  Flaherty and Crumrine

Tekla World Healthcare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tekla World Healthcare are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly inconsistent technical indicators, Tekla World may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Flaherty and Crumrine

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flaherty and Crumrine are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Flaherty is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Tekla World and Flaherty

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

The idea behind Tekla World Healthcare and Flaherty and Crumrine 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.