Correlation Between UnitedHealth Group and Accelerate Canadian

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

By analyzing existing cross correlation between UnitedHealth Group CDR and Accelerate Canadian Long, you can compare the effects of market volatilities on UnitedHealth Group and Accelerate Canadian 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 Accelerate Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Accelerate Canadian.

Diversification Opportunities for UnitedHealth Group and Accelerate Canadian

0.4

Correlation Coefficient

UnitedHealth Group  Accelerate Canadian

Very weak diversification

The 3 months correlation between UnitedHealth and Accelerate is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Accelerate Canadian Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accelerate Canadian Long 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 CDR are associated (or correlated) with Accelerate Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accelerate Canadian Long has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Accelerate Canadian go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Accelerate Canadian

Assuming the 90 days trading horizon UnitedHealth Group CDR is expected to generate 2.15 times more return on investment than Accelerate Canadian. However, UnitedHealth Group is 2.15 times more volatile than Accelerate Canadian Long. It trades about 0.02 of its potential returns per unit of risk. Accelerate Canadian Long is currently generating about -0.05 per unit of risk. If you would invest  2,420  in UnitedHealth Group CDR on December 27, 2024 and sell it today you would earn a total of  34.00  from holding UnitedHealth Group CDR or generate 1.4% return on investment over 90 days.

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

UnitedHealth Group CDR  vs.  Accelerate Canadian Long

UnitedHealth Group CDR

Risk-Adjusted Performance

Weak

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

Accelerate Canadian Long

Risk-Adjusted Performance

Very Weak

Over the last 90 days Accelerate Canadian Long has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Accelerate Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with UnitedHealth Group and Accelerate Canadian

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

The idea behind UnitedHealth Group CDR and Accelerate Canadian Long 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.