Correlation Between Economic Investment and UnitedHealth Group

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

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

Diversification Opportunities for Economic Investment and UnitedHealth Group

0.07

Correlation Coefficient

Economic Investment  UnitedHealth Group

Significant diversification

The 3 months correlation between Economic and UnitedHealth is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Economic Investment Trust 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 Economic Investment 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 Economic Investment Trust 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 Economic Investment i.e., Economic Investment and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Economic Investment and UnitedHealth Group

Assuming the 90 days trading horizon Economic Investment Trust is expected to generate 1.34 times more return on investment than UnitedHealth Group. However, Economic Investment is 1.34 times more volatile than UnitedHealth Group CDR. It trades about 0.02 of its potential returns per unit of risk. UnitedHealth Group CDR is currently generating about 0.01 per unit of risk. If you would invest  16,234  in Economic Investment Trust on December 26, 2024 and sell it today you would earn a total of  166.00  from holding Economic Investment Trust or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Economic Investment Trust  vs.  UnitedHealth Group CDR

Economic Investment Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Economic Investment Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Economic Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

UnitedHealth Group CDR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UnitedHealth Group CDR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, UnitedHealth Group is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Economic Investment and UnitedHealth Group

The main advantage of trading using opposite Economic Investment and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Economic Investment 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 Economic Investment Trust 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.