Correlation Between Shopify and Teladoc
Can any of the company-specific risk be diversified away by investing in both Shopify and Teladoc 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 Shopify and Teladoc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shopify and Teladoc, you can compare the effects of market volatilities on Shopify and Teladoc 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 Shopify with a short position of Teladoc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shopify and Teladoc.
Diversification Opportunities for Shopify and Teladoc
Poor diversification
The 3 months correlation between Shopify and Teladoc is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Shopify and Teladoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teladoc and Shopify 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 Shopify are associated (or correlated) with Teladoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teladoc has no effect on the direction of Shopify i.e., Shopify and Teladoc go up and down completely randomly.
Pair Corralation between Shopify and Teladoc
Assuming the 90 days horizon Shopify is expected to generate 1.01 times more return on investment than Teladoc. However, Shopify is 1.01 times more volatile than Teladoc. It trades about 0.32 of its potential returns per unit of risk. Teladoc is currently generating about 0.24 per unit of risk. If you would invest 7,385 in Shopify on August 29, 2024 and sell it today you would earn a total of 3,329 from holding Shopify or generate 45.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shopify vs. Teladoc
Performance |
| Timeline |
| Shopify |
| Teladoc |
Shopify and Teladoc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shopify and Teladoc
The main advantage of trading using opposite Shopify and Teladoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shopify position performs unexpectedly, Teladoc 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 Teladoc will offset losses from the drop in Teladoc's long position.The idea behind Shopify and Teladoc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |