Correlation Between Teladoc Health and Telefnica

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

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

Diversification Opportunities for Teladoc Health and Telefnica

-0.4

Correlation Coefficient

Teladoc Health  Telefnica

Very good diversification

The 3 months correlation between Teladoc and Telefnica is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Teladoc Health and Telefnica SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefnica SA 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 Telefnica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefnica SA has no effect on the direction of Teladoc Health i.e., Teladoc Health and Telefnica go up and down completely randomly.

Pair Corralation between Teladoc Health and Telefnica

Assuming the 90 days trading horizon Teladoc Health is expected to generate 5.17 times more return on investment than Telefnica. However, Teladoc Health is 5.17 times more volatile than Telefnica SA. It trades about 0.02 of its potential returns per unit of risk. Telefnica SA is currently generating about 0.04 per unit of risk. If you would invest  196.00  in Teladoc Health on December 26, 2024 and sell it today you would lose (31.00) from holding Teladoc Health or give up 15.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Teladoc Health  vs.  Telefnica SA

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 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Telefnica SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Telefnica SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Telefnica is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Teladoc Health and Telefnica

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

The idea behind Teladoc Health and Telefnica SA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.