Correlation Between NI Holdings and UNITEDHEALTH

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

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

Diversification Opportunities for NI Holdings and UNITEDHEALTH

-0.42

Correlation Coefficient

NI Holdings  UNITEDHEALTH

Very good diversification

The 3 months correlation between NODK and UNITEDHEALTH is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding NI Holdings 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 NI Holdings 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 NI Holdings 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 NI Holdings i.e., NI Holdings and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between NI Holdings and UNITEDHEALTH

Given the investment horizon of 90 days NI Holdings is expected to under-perform the UNITEDHEALTH. But the stock apears to be less risky and, when comparing its historical volatility, NI Holdings is 1.31 times less risky than UNITEDHEALTH. The stock trades about -0.36 of its potential returns per unit of risk. The UNITEDHEALTH GROUP INC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  11,779  in UNITEDHEALTH GROUP INC on October 9, 2024 and sell it today you would earn a total of  257.00  from holding UNITEDHEALTH GROUP INC or generate 2.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

NI Holdings  vs.  UNITEDHEALTH GROUP INC

NI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, NI Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UNITEDHEALTH GROUP INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 NI Holdings and UNITEDHEALTH

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