Correlation Between Joint Stock and UNITEDHEALTH

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

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

Diversification Opportunities for Joint Stock and UNITEDHEALTH

-0.63

Correlation Coefficient

Joint Stock  UNITEDHEALTH

Excellent diversification

The 3 months correlation between Joint and UNITEDHEALTH is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Joint Stock 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 Joint Stock 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 Joint Stock 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 Joint Stock i.e., Joint Stock and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between Joint Stock and UNITEDHEALTH

Given the investment horizon of 90 days Joint Stock is expected to under-perform the UNITEDHEALTH. But the stock apears to be less risky and, when comparing its historical volatility, Joint Stock is 3.73 times less risky than UNITEDHEALTH. The stock trades about -0.15 of its potential returns per unit of risk. The UNITEDHEALTH GROUP INC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  6,237  in UNITEDHEALTH GROUP INC on September 21, 2024 and sell it today you would earn a total of  1,725  from holding UNITEDHEALTH GROUP INC or generate 27.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Joint Stock  vs.  UNITEDHEALTH GROUP INC

Joint Stock

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Joint Stock are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Joint Stock is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

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 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Joint Stock and UNITEDHEALTH

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