Correlation Between Teladoc Health and CVS Health
Can any of the company-specific risk be diversified away by investing in both Teladoc Health and CVS 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 Teladoc Health and CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teladoc Health and CVS Health, you can compare the effects of market volatilities on Teladoc Health and CVS 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 Teladoc Health with a short position of CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teladoc Health and CVS Health.
Diversification Opportunities for Teladoc Health and CVS Health
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Teladoc and CVS is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Teladoc Health and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health and Teladoc Health 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 Teladoc Health are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of Teladoc Health i.e., Teladoc Health and CVS Health go up and down completely randomly.
Pair Corralation between Teladoc Health and CVS Health
Assuming the 90 days trading horizon Teladoc Health is expected to under-perform the CVS Health. In addition to that, Teladoc Health is 1.81 times more volatile than CVS Health. It trades about -0.01 of its total potential returns per unit of risk. CVS Health is currently generating about 0.01 per unit of volatility. If you would invest 3,296 in CVS Health on August 24, 2024 and sell it today you would lose (2.00) from holding CVS Health or give up 0.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.0% |
| Values | Daily Returns |
Teladoc Health vs. CVS Health
Performance |
| Timeline |
| Teladoc Health |
| CVS Health |
Teladoc Health and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teladoc Health and CVS Health
The main advantage of trading using opposite Teladoc Health and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teladoc Health position performs unexpectedly, CVS 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 CVS Health will offset losses from the drop in CVS Health's long position.| Teladoc Health vs. BTG Pactual Logstica | Teladoc Health vs. Plano Plano Desenvolvimento | Teladoc Health vs. Companhia Habitasul de | Teladoc Health vs. The Procter Gamble |
| CVS Health vs. BTG Pactual Logstica | CVS Health vs. Plano Plano Desenvolvimento | CVS Health vs. Companhia Habitasul de | CVS Health vs. The Procter Gamble |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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