Correlation Between Insteel Industries and UNITEDHEALTH

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

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

Diversification Opportunities for Insteel Industries and UNITEDHEALTH

0.1

Correlation Coefficient

Insteel Industries  UNITEDHEALTH

Average diversification

The 3 months correlation between Insteel and UNITEDHEALTH is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries 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 Insteel Industries 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 Insteel Industries 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 Insteel Industries i.e., Insteel Industries and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between Insteel Industries and UNITEDHEALTH

Given the investment horizon of 90 days Insteel Industries is expected to generate 5.53 times less return on investment than UNITEDHEALTH. But when comparing it to its historical volatility, Insteel Industries is 1.09 times less risky than UNITEDHEALTH. It trades about 0.01 of its potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,671  in UNITEDHEALTH GROUP INC on October 20, 2024 and sell it today you would earn a total of  773.00  from holding UNITEDHEALTH GROUP INC or generate 8.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Insteel Industries  vs.  UNITEDHEALTH GROUP INC

Insteel Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Insteel Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Insteel Industries is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UNITEDHEALTH GROUP INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UNITEDHEALTH may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Insteel Industries and UNITEDHEALTH

The main advantage of trading using opposite Insteel Industries and UNITEDHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries 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 Insteel Industries 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.