Correlation Between Teladoc Health and Uber Technologies

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

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

Diversification Opportunities for Teladoc Health and Uber Technologies

-0.34

Correlation Coefficient

Teladoc Health  Uber Technologies

Very good diversification

The 3 months correlation between Teladoc and Uber is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Teladoc Health and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Teladoc Health i.e., Teladoc Health and Uber Technologies go up and down completely randomly.

Pair Corralation between Teladoc Health and Uber Technologies

Assuming the 90 days trading horizon Teladoc Health is expected to generate 1.48 times more return on investment than Uber Technologies. However, Teladoc Health is 1.48 times more volatile than Uber Technologies. It trades about 0.06 of its potential returns per unit of risk. Uber Technologies is currently generating about -0.05 per unit of risk. If you would invest  165.00  in Teladoc Health on October 23, 2024 and sell it today you would earn a total of  15.00  from holding Teladoc Health or generate 9.09% return on investment over 90 days.

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

Teladoc Health  vs.  Uber Technologies

Teladoc Health

Risk-Adjusted Performance

4 of 100

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.

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Teladoc Health and Uber Technologies

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

The idea behind Teladoc Health and Uber Technologies 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.