Correlation Between Alphabet and UNITEDHEALTH

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

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

Diversification Opportunities for Alphabet and UNITEDHEALTH

-0.55

Correlation Coefficient

Alphabet  UNITEDHEALTH

Excellent diversification

The 3 months correlation between Alphabet and UNITEDHEALTH is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class A 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 Alphabet 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 Alphabet Inc Class A 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 Alphabet i.e., Alphabet and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between Alphabet and UNITEDHEALTH

Assuming the 90 days horizon Alphabet Inc Class A is expected to under-perform the UNITEDHEALTH. In addition to that, Alphabet is 2.1 times more volatile than UNITEDHEALTH GROUP INC. It trades about -0.13 of its total potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about 0.09 per unit of volatility. If you would invest  7,952  in UNITEDHEALTH GROUP INC on December 27, 2024 and sell it today you would earn a total of  384.00  from holding UNITEDHEALTH GROUP INC or generate 4.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Alphabet Inc Class A  vs.  UNITEDHEALTH GROUP INC

Alphabet Class A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class A 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UNITEDHEALTH GROUP INC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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 Alphabet and UNITEDHEALTH

The main advantage of trading using opposite Alphabet and UNITEDHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class A 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.