Correlation Between HealthEquity and Teladoc

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

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

Diversification Opportunities for HealthEquity and Teladoc

0.81

Correlation Coefficient

HealthEquity  Teladoc

Very poor diversification

The 3 months correlation between HealthEquity and Teladoc is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding HealthEquity and Teladoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teladoc and HealthEquity 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 HealthEquity are associated (or correlated) with Teladoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teladoc has no effect on the direction of HealthEquity i.e., HealthEquity and Teladoc go up and down completely randomly.

Pair Corralation between HealthEquity and Teladoc

Considering the 90-day investment horizon HealthEquity is expected to under-perform the Teladoc. But the stock apears to be less risky and, when comparing its historical volatility, HealthEquity is 1.47 times less risky than Teladoc. The stock trades about -0.04 of its potential returns per unit of risk. The Teladoc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  909.00  in Teladoc on December 31, 2024 and sell it today you would lose (100.00) from holding Teladoc or give up 11.0% of portfolio value over 90 days.

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

HealthEquity  vs.  Teladoc

HealthEquity

Risk-Adjusted Performance

Very Weak

Over the last 90 days HealthEquity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Teladoc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teladoc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Teladoc is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HealthEquity and Teladoc

The main advantage of trading using opposite HealthEquity and Teladoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HealthEquity position performs unexpectedly, Teladoc 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 will offset losses from the drop in Teladoc's long position.

The idea behind HealthEquity and Teladoc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.