Correlation Between Boston Beer and UNITEDHEALTH

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

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

Diversification Opportunities for Boston Beer and UNITEDHEALTH

-0.22

Correlation Coefficient

Boston Beer  UNITEDHEALTH

Very good diversification

The 3 months correlation between Boston and UNITEDHEALTH is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Boston Beer 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 Boston Beer 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 Boston Beer 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 Boston Beer i.e., Boston Beer and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between Boston Beer and UNITEDHEALTH

Considering the 90-day investment horizon Boston Beer is expected to generate 8.33 times more return on investment than UNITEDHEALTH. However, Boston Beer is 8.33 times more volatile than UNITEDHEALTH GROUP INC. It trades about 0.0 of its potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about 0.0 per unit of risk. If you would invest  32,772  in Boston Beer on September 25, 2024 and sell it today you would lose (2,831) from holding Boston Beer or give up 8.64% of portfolio value over 90 days.

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

Boston Beer  vs.  UNITEDHEALTH GROUP INC

Boston Beer

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITEDHEALTH GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UNITEDHEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boston Beer and UNITEDHEALTH

The main advantage of trading using opposite Boston Beer and UNITEDHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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 Boston Beer 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.