Correlation Between UnitedHealth Group and Vitro SAB

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

Diversification Opportunities for UnitedHealth Group and Vitro SAB

0.21

Correlation Coefficient

UnitedHealth Group  Vitro SAB

Modest diversification

The 3 months correlation between UnitedHealth and Vitro is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Vitro SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitro SAB de 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 Vitro SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitro SAB de has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Vitro SAB go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Vitro SAB

Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 1.83 times more return on investment than Vitro SAB. However, UnitedHealth Group is 1.83 times more volatile than Vitro SAB de. It trades about 0.03 of its potential returns per unit of risk. Vitro SAB de is currently generating about -0.34 per unit of risk. If you would invest  1,021,654  in UnitedHealth Group Incorporated on December 24, 2024 and sell it today you would earn a total of  19,846  from holding UnitedHealth Group Incorporated or generate 1.94% 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.  Vitro SAB de

UnitedHealth Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UnitedHealth Group Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, UnitedHealth Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vitro SAB de

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vitro SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with UnitedHealth Group and Vitro SAB

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

The idea behind UnitedHealth Group Incorporated and Vitro SAB de 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.