Correlation Between Hampton Financial and UnitedHealth Group

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

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

Diversification Opportunities for Hampton Financial and UnitedHealth Group

-0.44

Correlation Coefficient

Hampton Financial  UnitedHealth Group

Very good diversification

The 3 months correlation between Hampton and UnitedHealth is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hampton Financial Corp 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 Hampton Financial 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 Hampton Financial Corp 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 Hampton Financial i.e., Hampton Financial and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Hampton Financial and UnitedHealth Group

Assuming the 90 days horizon Hampton Financial Corp is expected to under-perform the UnitedHealth Group. In addition to that, Hampton Financial is 1.96 times more volatile than UnitedHealth Group CDR. It trades about -0.01 of its total potential returns per unit of risk. UnitedHealth Group CDR is currently generating about 0.01 per unit of volatility. If you would invest  2,321  in UnitedHealth Group CDR on October 4, 2024 and sell it today you would earn a total of  77.00  from holding UnitedHealth Group CDR or generate 3.32% return on investment over 90 days.

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

Hampton Financial Corp  vs.  UnitedHealth Group CDR

Hampton Financial Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hampton Financial Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hampton Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

UnitedHealth Group CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UnitedHealth Group CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hampton Financial and UnitedHealth Group

The main advantage of trading using opposite Hampton Financial and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hampton Financial 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 Hampton Financial Corp 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.