Correlation Between GMS and UNITEDHEALTH

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

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

Diversification Opportunities for GMS and UNITEDHEALTH

-0.04

Correlation Coefficient

GMS  UNITEDHEALTH

Good diversification

The 3 months correlation between GMS and UNITEDHEALTH is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc 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 GMS 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 GMS Inc 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 GMS i.e., GMS and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between GMS and UNITEDHEALTH

Considering the 90-day investment horizon GMS Inc is expected to under-perform the UNITEDHEALTH. In addition to that, GMS is 1.84 times more volatile than UNITEDHEALTH GROUP INC. It trades about -0.12 of its total potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about 0.11 per unit of volatility. If you would invest  6,242  in UNITEDHEALTH GROUP INC on December 26, 2024 and sell it today you would earn a total of  420.00  from holding UNITEDHEALTH GROUP INC or generate 6.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

GMS Inc  vs.  UNITEDHEALTH GROUP INC

GMS Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days GMS Inc 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 primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNITEDHEALTH GROUP INC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, UNITEDHEALTH may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GMS and UNITEDHEALTH

The main advantage of trading using opposite GMS and UNITEDHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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 GMS Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..