Correlation Between Teladoc Health and Hormel Foods

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Can any of the company-specific risk be diversified away by investing in both Teladoc Health and Hormel Foods 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 Hormel Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teladoc Health and Hormel Foods, you can compare the effects of market volatilities on Teladoc Health and Hormel Foods 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 Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teladoc Health and Hormel Foods.

Diversification Opportunities for Teladoc Health and Hormel Foods

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Teladoc and Hormel is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Teladoc Health and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods 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 Hormel Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hormel Foods has no effect on the direction of Teladoc Health i.e., Teladoc Health and Hormel Foods go up and down completely randomly.

Pair Corralation between Teladoc Health and Hormel Foods

Assuming the 90 days trading horizon Teladoc Health is expected to generate 1.9 times more return on investment than Hormel Foods. However, Teladoc Health is 1.9 times more volatile than Hormel Foods. It trades about -0.11 of its potential returns per unit of risk. Hormel Foods is currently generating about -0.39 per unit of risk. If you would invest  190.00  in Teladoc Health on October 23, 2024 and sell it today you would lose (10.00) from holding Teladoc Health or give up 5.26% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Teladoc Health  vs.  Hormel Foods

 Performance 
       Timeline  
Teladoc Health 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Teladoc Health are ranked lower than 4 (%) 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.
Hormel Foods 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Hormel Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hormel Foods is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Teladoc Health and Hormel Foods Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Teladoc Health and Hormel Foods

The main advantage of trading using opposite Teladoc Health and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teladoc Health position performs unexpectedly, Hormel Foods 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 Hormel Foods will offset losses from the drop in Hormel Foods' long position.
The idea behind Teladoc Health and Hormel Foods 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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