Correlation Between Warner Music and Teladoc Health
Can any of the company-specific risk be diversified away by investing in both Warner Music 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 Warner Music and Teladoc Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warner Music Group and Teladoc Health, you can compare the effects of market volatilities on Warner Music 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 Warner Music with a short position of Teladoc Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Teladoc Health.
Diversification Opportunities for Warner Music and Teladoc Health
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Warner and Teladoc is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Teladoc Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teladoc Health and Warner Music 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 Warner Music Group 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 Warner Music i.e., Warner Music and Teladoc Health go up and down completely randomly.
Pair Corralation between Warner Music and Teladoc Health
Assuming the 90 days trading horizon Warner Music is expected to generate 2.49 times less return on investment than Teladoc Health. But when comparing it to its historical volatility, Warner Music Group is 2.75 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 0.08 of returns per unit of risk over similar time horizon. If you would invest 145.00 in Teladoc Health on November 3, 2024 and sell it today you would earn a total of 54.00 from holding Teladoc Health or generate 37.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. Teladoc Health
Performance |
| Timeline |
| Warner Music Group |
| Teladoc Health |
Warner Music and Teladoc Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Teladoc Health
The main advantage of trading using opposite Warner Music and Teladoc Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music 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.| Warner Music vs. Intelbras SA | Warner Music vs. Neogrid Participaes SA | Warner Music vs. Mliuz SA | Warner Music vs. Locaweb Servios de |
| Teladoc Health vs. Liberty Broadband | Teladoc Health vs. Tyson Foods | Teladoc Health vs. United States Steel | Teladoc Health vs. Verizon Communications |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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