Correlation Between Enhabit and Teladoc

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

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

Diversification Opportunities for Enhabit and Teladoc

-0.31

Correlation Coefficient

Enhabit  Teladoc

Very good diversification

The 3 months correlation between Enhabit and Teladoc is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Enhabit and Teladoc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teladoc and Enhabit 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 Enhabit 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 Enhabit i.e., Enhabit and Teladoc go up and down completely randomly.

Pair Corralation between Enhabit and Teladoc

Given the investment horizon of 90 days Enhabit is expected to generate 0.9 times more return on investment than Teladoc. However, Enhabit is 1.11 times less risky than Teladoc. It trades about -0.03 of its potential returns per unit of risk. Teladoc is currently generating about -0.03 per unit of risk. If you would invest  1,102  in Enhabit on September 2, 2024 and sell it today you would lose (329.00) from holding Enhabit or give up 29.85% of portfolio value over 90 days.

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

Enhabit  vs.  Teladoc

Enhabit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enhabit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Enhabit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Teladoc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Teladoc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Teladoc exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enhabit and Teladoc

The main advantage of trading using opposite Enhabit and Teladoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhabit 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 Enhabit 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.