Correlation Between PHN Multi and UnitedHealth Group

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

By analyzing existing cross correlation between PHN Multi Style All Cap and UnitedHealth Group CDR, you can compare the effects of market volatilities on PHN Multi and UnitedHealth Group 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 PHN Multi with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHN Multi and UnitedHealth Group.

Diversification Opportunities for PHN Multi and UnitedHealth Group

0.51

Correlation Coefficient

PHN Multi  UnitedHealth Group

Very weak diversification

The 3 months correlation between PHN and UnitedHealth is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding PHN Multi Style All Cap and UnitedHealth Group CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group CDR and PHN Multi 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 PHN Multi Style All Cap are associated (or correlated) with UnitedHealth Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UnitedHealth Group CDR has no effect on the direction of PHN Multi i.e., PHN Multi and UnitedHealth Group go up and down completely randomly.

Pair Corralation between PHN Multi and UnitedHealth Group

Assuming the 90 days trading horizon PHN Multi Style All Cap is expected to generate 0.65 times more return on investment than UnitedHealth Group. However, PHN Multi Style All Cap is 1.53 times less risky than UnitedHealth Group. It trades about -0.1 of its potential returns per unit of risk. UnitedHealth Group CDR is currently generating about -0.18 per unit of risk. If you would invest  2,871  in PHN Multi Style All Cap on November 29, 2024 and sell it today you would lose (275.00) from holding PHN Multi Style All Cap or give up 9.58% of portfolio value over 90 days.

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

PHN Multi Style All Cap  vs.  UnitedHealth Group CDR

PHN Multi Style

Risk-Adjusted Performance

Very Weak

Over the last 90 days PHN Multi Style All Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

UnitedHealth Group CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days UnitedHealth Group CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with PHN Multi and UnitedHealth Group

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

The idea behind PHN Multi Style All Cap and UnitedHealth Group CDR 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.