Correlation Between Oscar Health and UnitedHealth Group

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

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

Diversification Opportunities for Oscar Health and UnitedHealth Group

0.15

Correlation Coefficient

Oscar Health  UnitedHealth Group

Average diversification

The 3 months correlation between Oscar and UnitedHealth is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Oscar Health and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Oscar Health 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 Oscar Health 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 Oscar Health i.e., Oscar Health and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Oscar Health and UnitedHealth Group

Given the investment horizon of 90 days Oscar Health is expected to generate 2.37 times more return on investment than UnitedHealth Group. However, Oscar Health is 2.37 times more volatile than UnitedHealth Group Incorporated. It trades about 0.01 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.03 per unit of risk. If you would invest  1,358  in Oscar Health on December 30, 2024 and sell it today you would lose (28.00) from holding Oscar Health or give up 2.06% of portfolio value over 90 days.

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

Oscar Health  vs.  UnitedHealth Group Incorporate

Oscar Health

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oscar Health are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Oscar Health is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

UnitedHealth Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UnitedHealth Group Incorporated are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, UnitedHealth Group is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Oscar Health and UnitedHealth Group

The main advantage of trading using opposite Oscar Health and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oscar Health 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 Oscar Health 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.