Correlation Between Teladoc Health and Alaska Air

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

By analyzing existing cross correlation between Teladoc Health and Alaska Air Group,, you can compare the effects of market volatilities on Teladoc Health and Alaska Air 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 Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teladoc Health and Alaska Air.

Diversification Opportunities for Teladoc Health and Alaska Air

0.53

Correlation Coefficient

Teladoc Health  Alaska Air

Very weak diversification

The 3 months correlation between Teladoc and Alaska is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Teladoc Health and Alaska Air Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group, 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group, has no effect on the direction of Teladoc Health i.e., Teladoc Health and Alaska Air go up and down completely randomly.

Pair Corralation between Teladoc Health and Alaska Air

Assuming the 90 days trading horizon Teladoc Health is expected to generate 3.43 times more return on investment than Alaska Air. However, Teladoc Health is 3.43 times more volatile than Alaska Air Group,. It trades about 0.07 of its potential returns per unit of risk. Alaska Air Group, is currently generating about -0.18 per unit of risk. If you would invest  196.00  in Teladoc Health on December 24, 2024 and sell it today you would earn a total of  42.00  from holding Teladoc Health or generate 21.43% return on investment over 90 days.

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

Teladoc Health  vs.  Alaska Air Group,

Teladoc Health

Risk-Adjusted Performance

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.

Alaska Air Group,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alaska Air Group, 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 essential 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.

Pair Trading with Teladoc Health and Alaska Air

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

The idea behind Teladoc Health and Alaska Air Group, 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.