Correlation Between Blackrock Muniyield and Tekla Healthcare

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

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

Diversification Opportunities for Blackrock Muniyield and Tekla Healthcare

0.51

Correlation Coefficient

Blackrock Muniyield  Tekla Healthcare

Very weak diversification

The 3 months correlation between Blackrock and Tekla is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield Quality 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 Blackrock Muniyield 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 Blackrock Muniyield Quality 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 Blackrock Muniyield i.e., Blackrock Muniyield and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Blackrock Muniyield and Tekla Healthcare

Considering the 90-day investment horizon Blackrock Muniyield Quality is expected to generate 0.64 times more return on investment than Tekla Healthcare. However, Blackrock Muniyield Quality is 1.57 times less risky than Tekla Healthcare. It trades about 0.07 of its potential returns per unit of risk. Tekla Healthcare Investors is currently generating about -0.11 per unit of risk. If you would invest  1,042  in Blackrock Muniyield Quality on September 3, 2024 and sell it today you would earn a total of  26.00  from holding Blackrock Muniyield Quality or generate 2.5% return on investment over 90 days.

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

Blackrock Muniyield Quality  vs.  Tekla Healthcare Investors

Blackrock Muniyield

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniyield Quality are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Blackrock Muniyield is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private 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 weak 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 Blackrock Muniyield and Tekla Healthcare

The main advantage of trading using opposite Blackrock Muniyield and Tekla Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniyield 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 Blackrock Muniyield Quality 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.