Correlation Between Intel and UnitedHealth Group

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

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

Diversification Opportunities for Intel and UnitedHealth Group

0.43

Correlation Coefficient

Intel  UnitedHealth Group

Very weak diversification

The 3 months correlation between Intel and UnitedHealth is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Intel and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Intel 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 Intel 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 has no effect on the direction of Intel i.e., Intel and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Intel and UnitedHealth Group

Assuming the 90 days trading horizon Intel is expected to generate 1.25 times more return on investment than UnitedHealth Group. However, Intel is 1.25 times more volatile than UnitedHealth Group Incorporated. It trades about 0.05 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about -0.06 per unit of risk. If you would invest  37,944  in Intel on September 13, 2024 and sell it today you would earn a total of  2,569  from holding Intel or generate 6.77% return on investment over 90 days.

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

Intel  vs.  UnitedHealth Group Incorporate

Intel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Intel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

UnitedHealth Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UnitedHealth Group Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Intel and UnitedHealth Group

The main advantage of trading using opposite Intel and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel and UnitedHealth Group Incorporated 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.