Correlation Between Tekla Healthcare and Mainstay Epoch

Can any of the company-specific risk be diversified away by investing in both Tekla Healthcare and Mainstay Epoch 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 Mainstay Epoch 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 Mainstay Epoch Small, you can compare the effects of market volatilities on Tekla Healthcare and Mainstay Epoch 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 Mainstay Epoch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Mainstay Epoch.

Diversification Opportunities for Tekla Healthcare and Mainstay Epoch

0.18

Correlation Coefficient

Tekla Healthcare  Mainstay Epoch

Average diversification

The 3 months correlation between Tekla and Mainstay is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Opportunities and Mainstay Epoch Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Epoch Small 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 Mainstay Epoch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Epoch Small has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Mainstay Epoch go up and down completely randomly.

Pair Corralation between Tekla Healthcare and Mainstay Epoch

Considering the 90-day investment horizon Tekla Healthcare Opportunities is expected to generate 0.94 times more return on investment than Mainstay Epoch. However, Tekla Healthcare Opportunities is 1.06 times less risky than Mainstay Epoch. It trades about 0.08 of its potential returns per unit of risk. Mainstay Epoch Small is currently generating about -0.18 per unit of risk. If you would invest  2,015  in Tekla Healthcare Opportunities on December 4, 2024 and sell it today you would earn a total of  93.00  from holding Tekla Healthcare Opportunities or generate 4.62% return on investment over 90 days.

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

Tekla Healthcare Opportunities  vs.  Mainstay Epoch Small

Tekla Healthcare Opp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tekla Healthcare Opportunities are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable technical indicators, Tekla Healthcare is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Mainstay Epoch Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mainstay Epoch Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Tekla Healthcare and Mainstay Epoch

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

The idea behind Tekla Healthcare Opportunities and Mainstay Epoch Small 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.