Correlation Between UnitedHealth Group and Black Widow

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

Diversification Opportunities for UnitedHealth Group and Black Widow

-0.44

Correlation Coefficient

UnitedHealth Group  Black Widow

Very good diversification

The 3 months correlation between UnitedHealth and Black is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Black Widow Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Widow Resources 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 Black Widow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Widow Resources has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Black Widow go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Black Widow

Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 11.08 times less return on investment than Black Widow. But when comparing it to its historical volatility, UnitedHealth Group CDR is 5.85 times less risky than Black Widow. It trades about 0.02 of its potential returns per unit of risk. Black Widow Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Black Widow Resources on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Black Widow Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

UnitedHealth Group CDR  vs.  Black Widow Resources

UnitedHealth Group CDR

Risk-Adjusted Performance

1 of 100

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 latest stock price disarray, may contribute to short-term losses for the investors.

Black Widow Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Black Widow Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Black Widow showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UnitedHealth Group and Black Widow

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

The idea behind UnitedHealth Group CDR and Black Widow Resources 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.