Correlation Between Teladoc Health and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Teladoc Health and Sumitomo Mitsui 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 Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teladoc Health and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Teladoc Health and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teladoc Health and Sumitomo Mitsui.
Diversification Opportunities for Teladoc Health and Sumitomo Mitsui
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Teladoc and Sumitomo is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Teladoc Health and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Teladoc Health i.e., Teladoc Health and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Teladoc Health and Sumitomo Mitsui
Assuming the 90 days trading horizon Teladoc Health is expected to generate 2.16 times more return on investment than Sumitomo Mitsui. However, Teladoc Health is 2.16 times more volatile than Sumitomo Mitsui Financial. It trades about 0.12 of its potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.22 per unit of risk. 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 | 100.0% |
| Values | Daily Returns |
Teladoc Health vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Teladoc Health |
| Sumitomo Mitsui Financial |
Teladoc Health and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teladoc Health and Sumitomo Mitsui
The main advantage of trading using opposite Teladoc Health and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teladoc Health position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Teladoc Health vs. Fundo Investimento Imobiliario | Teladoc Health vs. LESTE FDO INV | Teladoc Health vs. Fras le SA | Teladoc Health vs. Western Digital |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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