Correlation Between Fair Isaac and Teladoc Health

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

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

Diversification Opportunities for Fair Isaac and Teladoc Health

0.75

Correlation Coefficient

Fair Isaac  Teladoc Health

Poor diversification

The 3 months correlation between Fair and Teladoc is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and Teladoc Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teladoc Health and Fair Isaac 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 Fair Isaac 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 Fair Isaac i.e., Fair Isaac and Teladoc Health go up and down completely randomly.

Pair Corralation between Fair Isaac and Teladoc Health

Assuming the 90 days trading horizon Fair Isaac is expected to generate 0.55 times more return on investment than Teladoc Health. However, Fair Isaac is 1.82 times less risky than Teladoc Health. It trades about 0.13 of its potential returns per unit of risk. Teladoc Health is currently generating about -0.04 per unit of risk. If you would invest  13,416  in Fair Isaac on October 24, 2024 and sell it today you would earn a total of  11,892  from holding Fair Isaac or generate 88.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

Fair Isaac  vs.  Teladoc Health

Fair Isaac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fair Isaac has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Fair Isaac is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Teladoc Health

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teladoc Health are ranked lower than 5 (%) 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 Fair Isaac and Teladoc Health

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

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.