Correlation Between GE Aerospace and UNITEDHEALTH

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

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

Diversification Opportunities for GE Aerospace and UNITEDHEALTH

0.61

Correlation Coefficient

GE Aerospace  UNITEDHEALTH

Poor diversification

The 3 months correlation between GE Aerospace and UNITEDHEALTH is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace 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 GE Aerospace 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 GE Aerospace 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 GE Aerospace i.e., GE Aerospace and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between GE Aerospace and UNITEDHEALTH

Allowing for the 90-day total investment horizon GE Aerospace is expected to under-perform the UNITEDHEALTH. In addition to that, GE Aerospace is 2.28 times more volatile than UNITEDHEALTH GROUP INC. It trades about -0.19 of its total potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about -0.19 per unit of volatility. If you would invest  9,764  in UNITEDHEALTH GROUP INC on September 18, 2024 and sell it today you would lose (294.00) from holding UNITEDHEALTH GROUP INC or give up 3.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

GE Aerospace  vs.  UNITEDHEALTH GROUP INC

GE Aerospace

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GE Aerospace has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITEDHEALTH GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UNITEDHEALTH is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GE Aerospace and UNITEDHEALTH

The main advantage of trading using opposite GE Aerospace and UNITEDHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace 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 GE Aerospace 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.