Correlation Between Paycom Software and Teladoc Health
Can any of the company-specific risk be diversified away by investing in both Paycom Software 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 Paycom Software and Teladoc Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paycom Software and Teladoc Health, you can compare the effects of market volatilities on Paycom Software 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 Paycom Software with a short position of Teladoc Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paycom Software and Teladoc Health.
Diversification Opportunities for Paycom Software and Teladoc Health
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Paycom and Teladoc is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Software and Teladoc Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teladoc Health and Paycom Software 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 Paycom Software 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 Paycom Software i.e., Paycom Software and Teladoc Health go up and down completely randomly.
Pair Corralation between Paycom Software and Teladoc Health
Assuming the 90 days trading horizon Paycom Software is expected to generate 2.84 times less return on investment than Teladoc Health. But when comparing it to its historical volatility, Paycom Software is 2.11 times less risky than Teladoc Health. It trades about 0.09 of its potential returns per unit of risk. Teladoc Health is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 190.00 in Teladoc Health on September 12, 2024 and sell it today you would earn a total of 22.00 from holding Teladoc Health or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Paycom Software vs. Teladoc Health
Performance |
| Timeline |
| Paycom Software |
| Teladoc Health |
Paycom Software and Teladoc Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paycom Software and Teladoc Health
The main advantage of trading using opposite Paycom Software and Teladoc Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paycom Software 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.| Paycom Software vs. Prudential Financial | Paycom Software vs. Charter Communications | Paycom Software vs. Zoom Video Communications | Paycom Software vs. Ameriprise Financial |
| Teladoc Health vs. Fundo Investimento Imobiliario | Teladoc Health vs. LESTE FDO INV | Teladoc Health vs. Fras le SA | Teladoc Health vs. Western Digital |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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