Correlation Between Ares Management and Teladoc Health

Can any of the company-specific risk be diversified away by investing in both Ares Management 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 Ares Management and Teladoc Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ares Management and Teladoc Health, you can compare the effects of market volatilities on Ares Management 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 Ares Management with a short position of Teladoc Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares Management and Teladoc Health.

Diversification Opportunities for Ares Management and Teladoc Health

0.36

Correlation Coefficient

Ares Management  Teladoc Health

Weak diversification

The 3 months correlation between Ares and Teladoc is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ares Management and Teladoc Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teladoc Health and Ares Management 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 Ares Management 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 Ares Management i.e., Ares Management and Teladoc Health go up and down completely randomly.

Pair Corralation between Ares Management and Teladoc Health

Assuming the 90 days trading horizon Ares Management is expected to under-perform the Teladoc Health. But the stock apears to be less risky and, when comparing its historical volatility, Ares Management is 4.41 times less risky than Teladoc Health. The stock trades about -0.17 of its potential returns per unit of risk. The Teladoc Health is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  196.00  in Teladoc Health on December 25, 2024 and sell it today you would lose (26.00) from holding Teladoc Health or give up 13.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ares Management  vs.  Teladoc Health

Ares Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ares Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Teladoc Health

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teladoc Health are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Teladoc Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ares Management and Teladoc Health

The main advantage of trading using opposite Ares Management and Teladoc Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares Management 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.

The idea behind Ares Management and Teladoc Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.