Correlation Between Flaherty and Tekla Healthcare

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

Diversification Opportunities for Flaherty and Tekla Healthcare

0.34

Correlation Coefficient

Flaherty  Tekla Healthcare

Weak diversification

The 3 months correlation between Flaherty and Tekla is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Flaherty and Crumrine 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 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 and Crumrine 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 i.e., Flaherty and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Flaherty and Tekla Healthcare

Considering the 90-day investment horizon Flaherty and Crumrine is expected to under-perform the Tekla Healthcare. But the etf apears to be less risky and, when comparing its historical volatility, Flaherty and Crumrine is 1.14 times less risky than Tekla Healthcare. The etf trades about -0.26 of its potential returns per unit of risk. The Tekla Healthcare Investors is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  1,663  in Tekla Healthcare Investors on February 1, 2024 and sell it today you would lose (48.00) from holding Tekla Healthcare Investors or give up 2.89% of portfolio value over 90 days.

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

Flaherty and Crumrine  vs.  Tekla Healthcare Investors

Flaherty and Crumrine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flaherty and Crumrine has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

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 current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Flaherty and Tekla Healthcare

The main advantage of trading using opposite Flaherty and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flaherty 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 and Crumrine 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 Stocks Directory module to find actively traded stocks across global markets.