Correlation Between ESE Entertainment and UnitedHealth Group

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

Diversification Opportunities for ESE Entertainment and UnitedHealth Group

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ESE and UnitedHealth is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ESE Entertainment 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 ESE Entertainment 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 ESE Entertainment 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 ESE Entertainment i.e., ESE Entertainment and UnitedHealth Group go up and down completely randomly.

Pair Corralation between ESE Entertainment and UnitedHealth Group

Assuming the 90 days horizon ESE Entertainment is expected to under-perform the UnitedHealth Group. In addition to that, ESE Entertainment is 2.77 times more volatile than UnitedHealth Group CDR. It trades about -0.1 of its total potential returns per unit of risk. UnitedHealth Group CDR is currently generating about -0.09 per unit of volatility. If you would invest  2,784  in UnitedHealth Group CDR on October 6, 2024 and sell it today you would lose (343.00) from holding UnitedHealth Group CDR or give up 12.32% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

ESE Entertainment  vs.  UnitedHealth Group CDR

 Performance 
       Timeline  
ESE Entertainment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ESE Entertainment 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 basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.
UnitedHealth Group CDR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

ESE Entertainment and UnitedHealth Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ESE Entertainment and UnitedHealth Group

The main advantage of trading using opposite ESE Entertainment and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESE Entertainment 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 ESE Entertainment 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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