Correlation Between AMN Healthcare and Teladoc

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

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

Diversification Opportunities for AMN Healthcare and Teladoc

-0.72

Correlation Coefficient

AMN Healthcare  Teladoc

Pay attention - limited upside

The 3 months correlation between AMN and Teladoc is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding AMN Healthcare Services and Teladoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teladoc and AMN Healthcare 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 AMN Healthcare Services 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 AMN Healthcare i.e., AMN Healthcare and Teladoc go up and down completely randomly.

Pair Corralation between AMN Healthcare and Teladoc

Considering the 90-day investment horizon AMN Healthcare Services is expected to under-perform the Teladoc. In addition to that, AMN Healthcare is 1.22 times more volatile than Teladoc. It trades about -0.17 of its total potential returns per unit of risk. Teladoc is currently generating about 0.13 per unit of volatility. If you would invest  918.00  in Teladoc on August 31, 2024 and sell it today you would earn a total of  225.00  from holding Teladoc or generate 24.51% return on investment over 90 days.

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

AMN Healthcare Services  vs.  Teladoc

AMN Healthcare Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMN Healthcare Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Teladoc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Teladoc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Teladoc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AMN Healthcare and Teladoc

The main advantage of trading using opposite AMN Healthcare and Teladoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMN Healthcare 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 AMN Healthcare Services 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.