Correlation Between UnitedHealth Group and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Unilever PLC 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 Unilever PLC 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 Unilever PLC, you can compare the effects of market volatilities on UnitedHealth Group and Unilever PLC 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 Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Unilever PLC.
Diversification Opportunities for UnitedHealth Group and Unilever PLC
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UnitedHealth and Unilever is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Unilever PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC 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 Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Unilever PLC go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Unilever PLC
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 1.49 times more return on investment than Unilever PLC. However, UnitedHealth Group is 1.49 times more volatile than Unilever PLC. It trades about 0.06 of its potential returns per unit of risk. Unilever PLC is currently generating about 0.08 per unit of risk. If you would invest 819,875 in UnitedHealth Group Incorporated on September 10, 2024 and sell it today you would earn a total of 287,115 from holding UnitedHealth Group Incorporated or generate 35.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.72% |
Values | Daily Returns |
UnitedHealth Group Incorporate vs. Unilever PLC
Performance |
Timeline |
UnitedHealth Group |
Unilever PLC |
UnitedHealth Group and Unilever PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UnitedHealth Group and Unilever PLC
The main advantage of trading using opposite UnitedHealth Group and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Unilever PLC 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 Unilever PLC will offset losses from the drop in Unilever PLC's long position.UnitedHealth Group vs. Capital One Financial | UnitedHealth Group vs. Verizon Communications | UnitedHealth Group vs. CVS Health | UnitedHealth Group vs. Delta Air Lines |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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