Correlation Between Applied Blockchain and UNITEDHEALTH

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

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

Diversification Opportunities for Applied Blockchain and UNITEDHEALTH

-0.14

Correlation Coefficient

Applied Blockchain  UNITEDHEALTH

Good diversification

The 3 months correlation between Applied and UNITEDHEALTH is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and UNITEDHEALTH GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITEDHEALTH GROUP INC and Applied Blockchain 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 Applied Blockchain are associated (or correlated) with UNITEDHEALTH. 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 INC has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between Applied Blockchain and UNITEDHEALTH

Given the investment horizon of 90 days Applied Blockchain is expected to generate 3.57 times more return on investment than UNITEDHEALTH. However, Applied Blockchain is 3.57 times more volatile than UNITEDHEALTH GROUP INC. It trades about 0.06 of its potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about 0.07 per unit of risk. If you would invest  478.00  in Applied Blockchain on September 19, 2024 and sell it today you would earn a total of  397.50  from holding Applied Blockchain or generate 83.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.17%
Values	Daily Returns

Applied Blockchain  vs.  UNITEDHEALTH GROUP INC

Applied Blockchain

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Blockchain are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

6 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UNITEDHEALTH GROUP INC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UNITEDHEALTH sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Applied Blockchain and UNITEDHEALTH

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

The idea behind Applied Blockchain and UNITEDHEALTH GROUP INC 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.