Correlation Between Canso Credit and UnitedHealth Group

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

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

Diversification Opportunities for Canso Credit and UnitedHealth Group

-0.44

Correlation Coefficient

Canso Credit  UnitedHealth Group

Very good diversification

The 3 months correlation between Canso and UnitedHealth is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Canso Credit Trust and UnitedHealth Group CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group CDR and Canso Credit 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 Canso Credit Trust 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 CDR has no effect on the direction of Canso Credit i.e., Canso Credit and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Canso Credit and UnitedHealth Group

Assuming the 90 days trading horizon Canso Credit Trust is expected to generate 0.11 times more return on investment than UnitedHealth Group. However, Canso Credit Trust is 9.18 times less risky than UnitedHealth Group. It trades about 0.4 of its potential returns per unit of risk. UnitedHealth Group CDR is currently generating about -0.22 per unit of risk. If you would invest  1,542  in Canso Credit Trust on September 20, 2024 and sell it today you would earn a total of  41.00  from holding Canso Credit Trust or generate 2.66% return on investment over 90 days.

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

Canso Credit Trust  vs.  UnitedHealth Group CDR

Canso Credit Trust

Risk-Adjusted Performance

18 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Credit Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canso Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

UnitedHealth Group CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UnitedHealth Group CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Canso Credit and UnitedHealth Group

The main advantage of trading using opposite Canso Credit and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canso Credit 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 Canso Credit Trust and UnitedHealth Group CDR 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..