Correlation Between Disney and UNITEDHEALTH

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

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

Diversification Opportunities for Disney and UNITEDHEALTH

-0.4

Correlation Coefficient

Disney  UNITEDHEALTH

Very good diversification

The 3 months correlation between Disney and UNITEDHEALTH is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney 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 Disney 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 Walt Disney 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 Disney i.e., Disney and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between Disney and UNITEDHEALTH

Considering the 90-day investment horizon Disney is expected to generate 762.72 times less return on investment than UNITEDHEALTH. But when comparing it to its historical volatility, Walt Disney is 67.14 times less risky than UNITEDHEALTH. It trades about 0.01 of its potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8,488  in UNITEDHEALTH GROUP INC on October 23, 2024 and sell it today you would lose (722.00) from holding UNITEDHEALTH GROUP INC or give up 8.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.66%
Values	Daily Returns

Walt Disney  vs.  UNITEDHEALTH GROUP INC

Walt Disney

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney may actually be approaching a critical reversion point that can send shares even higher in February 2025.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UNITEDHEALTH GROUP INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UNITEDHEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Disney and UNITEDHEALTH

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

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.