Correlation Between Apple and UnitedHealth Group

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

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

Diversification Opportunities for Apple and UnitedHealth Group

-0.49

Correlation Coefficient

Apple  UnitedHealth Group

Very good diversification

The 3 months correlation between Apple and UnitedHealth is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Apple 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 Apple Inc 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 has no effect on the direction of Apple i.e., Apple and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Apple and UnitedHealth Group

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.57 times more return on investment than UnitedHealth Group. However, Apple Inc is 1.75 times less risky than UnitedHealth Group. It trades about 0.07 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about -0.16 per unit of risk. If you would invest  476,274  in Apple Inc on November 28, 2024 and sell it today you would earn a total of  29,576  from holding Apple Inc or generate 6.21% return on investment over 90 days.

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

Apple Inc  vs.  UnitedHealth Group Incorporate

Apple Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in March 2025.

UnitedHealth Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days UnitedHealth Group Incorporated 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 technical indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Apple and UnitedHealth Group

The main advantage of trading using opposite Apple and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc and UnitedHealth Group Incorporated 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.