Correlation Between Teladoc Health and Basic Materials
Can any of the company-specific risk be diversified away by investing in both Teladoc Health and Basic Materials 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 Basic Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teladoc Health and Basic Materials, you can compare the effects of market volatilities on Teladoc Health and Basic Materials 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 Basic Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teladoc Health and Basic Materials.
Diversification Opportunities for Teladoc Health and Basic Materials
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Teladoc and Basic is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Teladoc Health and Basic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Materials 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 Basic Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Materials has no effect on the direction of Teladoc Health i.e., Teladoc Health and Basic Materials go up and down completely randomly.
Pair Corralation between Teladoc Health and Basic Materials
Assuming the 90 days trading horizon Teladoc Health is expected to under-perform the Basic Materials. In addition to that, Teladoc Health is 2.04 times more volatile than Basic Materials. It trades about -0.11 of its total potential returns per unit of risk. Basic Materials is currently generating about -0.13 per unit of volatility. If you would invest 557,094 in Basic Materials on October 22, 2024 and sell it today you would lose (15,436) from holding Basic Materials or give up 2.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Teladoc Health vs. Basic Materials
Performance |
| Timeline |
Teladoc Health and Basic Materials Volatility Contrast
Predicted Return Density |
| Returns |
Teladoc Health
Pair trading matchups for Teladoc Health
Basic Materials
Pair trading matchups for Basic Materials
Pair Trading with Teladoc Health and Basic Materials
The main advantage of trading using opposite Teladoc Health and Basic Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teladoc Health position performs unexpectedly, Basic Materials 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 Basic Materials will offset losses from the drop in Basic Materials' long position.| Teladoc Health vs. Ares Management | Teladoc Health vs. Spotify Technology SA | Teladoc Health vs. Warner Music Group | Teladoc Health vs. Charter Communications |
| Basic Materials vs. Technos SA | Basic Materials vs. Roper Technologies, | Basic Materials vs. Zebra Technologies | Basic Materials vs. United States Steel |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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