Correlation Between UnitedHealth Group and Vanguard Industrials

Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Vanguard Industrials 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 Vanguard Industrials 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 Vanguard Industrials ETF, you can compare the effects of market volatilities on UnitedHealth Group and Vanguard Industrials 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 Vanguard Industrials. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Vanguard Industrials.

Diversification Opportunities for UnitedHealth Group and Vanguard Industrials

0.37

Correlation Coefficient

UnitedHealth Group  Vanguard Industrials

Weak diversification

The 3 months correlation between UnitedHealth and Vanguard is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Vanguard Industrials ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Industrials ETF 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 Vanguard Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Industrials ETF has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Vanguard Industrials go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Vanguard Industrials

Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 2.86 times less return on investment than Vanguard Industrials. In addition to that, UnitedHealth Group is 2.01 times more volatile than Vanguard Industrials ETF. It trades about 0.05 of its total potential returns per unit of risk. Vanguard Industrials ETF is currently generating about 0.28 per unit of volatility. If you would invest  477,082  in Vanguard Industrials ETF on September 3, 2024 and sell it today you would earn a total of  94,985  from holding Vanguard Industrials ETF or generate 19.91% return on investment over 90 days.

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

UnitedHealth Group Incorporate  vs.  Vanguard Industrials ETF

UnitedHealth Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UnitedHealth Group Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, UnitedHealth Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vanguard Industrials ETF

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Industrials ETF are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vanguard Industrials showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UnitedHealth Group and Vanguard Industrials

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

The idea behind UnitedHealth Group Incorporated and Vanguard Industrials ETF 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.