Correlation Between Elevance Health, and UnitedHealth Group

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Can any of the company-specific risk be diversified away by investing in both Elevance Health, 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 Elevance Health, and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elevance Health, and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Elevance Health, 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 Elevance Health, with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elevance Health, and UnitedHealth Group.

Diversification Opportunities for Elevance Health, and UnitedHealth Group

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Elevance and UnitedHealth is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Elevance Health, and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Elevance Health, 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 Elevance Health, 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 Elevance Health, i.e., Elevance Health, and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Elevance Health, and UnitedHealth Group

If you would invest  47,249  in Elevance Health, on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Elevance Health, or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy94.74%
ValuesDaily Returns

Elevance Health,  vs.  UnitedHealth Group Incorporate

 Performance 
       Timeline  
Elevance Health, 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Elevance Health, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
UnitedHealth Group 

Risk-Adjusted Performance

0 of 100

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

Elevance Health, and UnitedHealth Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Elevance Health, and UnitedHealth Group

The main advantage of trading using opposite Elevance Health, and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elevance Health, 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 Elevance Health, 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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