Correlation Between Bank of America and Teladoc Health
Can any of the company-specific risk be diversified away by investing in both Bank of America and Teladoc Health 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 Bank of America and Teladoc Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Teladoc Health, you can compare the effects of market volatilities on Bank of America and Teladoc Health 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 Bank of America with a short position of Teladoc Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Teladoc Health.
Diversification Opportunities for Bank of America and Teladoc Health
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Teladoc is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Teladoc Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teladoc Health and Bank of America 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 Bank of America are associated (or correlated) with Teladoc Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teladoc Health has no effect on the direction of Bank of America i.e., Bank of America and Teladoc Health go up and down completely randomly.
Pair Corralation between Bank of America and Teladoc Health
Assuming the 90 days trading horizon Bank of America is expected to generate 2.11 times less return on investment than Teladoc Health. But when comparing it to its historical volatility, Bank of America is 2.91 times less risky than Teladoc Health. It trades about 0.48 of its potential returns per unit of risk. Teladoc Health is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 169.00 in Teladoc Health on September 3, 2024 and sell it today you would earn a total of 71.00 from holding Teladoc Health or generate 42.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Teladoc Health
Performance |
| Timeline |
| Bank of America |
| Teladoc Health |
Bank of America and Teladoc Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Teladoc Health
The main advantage of trading using opposite Bank of America and Teladoc Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Teladoc Health 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 Health will offset losses from the drop in Teladoc Health's long position.| Bank of America vs. Citigroup | Bank of America vs. Fundo Investimento Imobiliario | Bank of America vs. Fras le SA | Bank of America vs. Western Digital |
| Teladoc Health vs. Bank of America | Teladoc Health vs. Bread Financial Holdings | Teladoc Health vs. Verizon Communications | Teladoc Health vs. Fidelity National Information |
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.
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