Correlation Between Genuine Parts and UNITEDHEALTH

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

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

Diversification Opportunities for Genuine Parts and UNITEDHEALTH

0.15

Correlation Coefficient

Genuine Parts  UNITEDHEALTH

Average diversification

The 3 months correlation between Genuine and UNITEDHEALTH is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts Co 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 Genuine Parts 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 Genuine Parts Co 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 Genuine Parts i.e., Genuine Parts and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between Genuine Parts and UNITEDHEALTH

Considering the 90-day investment horizon Genuine Parts Co is expected to generate 2.49 times more return on investment than UNITEDHEALTH. However, Genuine Parts is 2.49 times more volatile than UNITEDHEALTH GROUP INC. It trades about 0.03 of its potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about -0.05 per unit of risk. If you would invest  11,560  in Genuine Parts Co on December 26, 2024 and sell it today you would earn a total of  229.00  from holding Genuine Parts Co or generate 1.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Genuine Parts Co  vs.  UNITEDHEALTH GROUP INC

Genuine Parts

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genuine Parts Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Genuine Parts is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

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 Genuine Parts and UNITEDHEALTH

The main advantage of trading using opposite Genuine Parts and UNITEDHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts 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 Genuine Parts Co 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.