Correlation Between Senvest Capital and UnitedHealth Group

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

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

Diversification Opportunities for Senvest Capital and UnitedHealth Group

-0.62

Correlation Coefficient

Senvest Capital  UnitedHealth Group

Excellent diversification

The 3 months correlation between Senvest and UnitedHealth is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Senvest Capital 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 Senvest Capital 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 Senvest Capital 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 Senvest Capital i.e., Senvest Capital and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Senvest Capital and UnitedHealth Group

Assuming the 90 days trading horizon Senvest Capital is expected to generate 0.24 times more return on investment than UnitedHealth Group. However, Senvest Capital is 4.23 times less risky than UnitedHealth Group. It trades about 0.23 of its potential returns per unit of risk. UnitedHealth Group CDR is currently generating about -0.1 per unit of risk. If you would invest  32,500  in Senvest Capital on September 28, 2024 and sell it today you would earn a total of  2,500  from holding Senvest Capital or generate 7.69% return on investment over 90 days.

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

Senvest Capital  vs.  UnitedHealth Group CDR

Senvest Capital

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Senvest Capital are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Senvest Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 abnormal 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 Senvest Capital and UnitedHealth Group

The main advantage of trading using opposite Senvest Capital and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senvest Capital 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 Senvest Capital 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.