Correlation Between UnitedHealth Group and NIKE

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

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

Diversification Opportunities for UnitedHealth Group and NIKE

-0.22

Correlation Coefficient

UnitedHealth Group  NIKE

Very good diversification

The 3 months correlation between UnitedHealth and NIKE is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and NIKE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc and UnitedHealth Group 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 UnitedHealth Group Incorporated are associated (or correlated) with NIKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIKE Inc has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and NIKE go up and down completely randomly.

Pair Corralation between UnitedHealth Group and NIKE

Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to under-perform the NIKE. In addition to that, UnitedHealth Group is 1.81 times more volatile than NIKE Inc. It trades about -0.27 of its total potential returns per unit of risk. NIKE Inc is currently generating about 0.19 per unit of volatility. If you would invest  147,789  in NIKE Inc on September 18, 2024 and sell it today you would earn a total of  8,250  from holding NIKE Inc or generate 5.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

UnitedHealth Group Incorporate  vs.  NIKE Inc

UnitedHealth Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UnitedHealth Group Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

NIKE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIKE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, NIKE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with UnitedHealth Group and NIKE

The main advantage of trading using opposite UnitedHealth Group and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, NIKE 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 NIKE will offset losses from the drop in NIKE's long position.

The idea behind UnitedHealth Group Incorporated and NIKE 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.