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

-0.48

Correlation Coefficient

Tekla Healthcare  Mainstay Epoch

Very good diversification

The 3 months correlation between Tekla and Mainstay is -0.48. 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 under-perform the Mainstay Epoch. But the fund apears to be less risky and, when comparing its historical volatility, Tekla Healthcare Opportunities is 1.13 times less risky than Mainstay Epoch. The fund trades about -0.17 of its potential returns per unit of risk. The Mainstay Epoch Small is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,388  in Mainstay Epoch Small on October 5, 2024 and sell it today you would earn a total of  155.00  from holding Mainstay Epoch Small or generate 6.49% return on investment over 90 days.

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

Tekla Healthcare Opportunities  vs.  Mainstay Epoch Small

Tekla Healthcare Opp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla Healthcare Opportunities has generated negative risk-adjusted returns adding no value to fund investors. Even with inconsistent performance in the last few months, the Fund's technical indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the fund retail investors.

Mainstay Epoch Small

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mainstay Epoch Small are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mainstay Epoch may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

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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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .