Correlation Between UnitedHealth Group and DGTL Holdings

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

Diversification Opportunities for UnitedHealth Group and DGTL Holdings

0.04

Correlation Coefficient

UnitedHealth Group  DGTL Holdings

Significant diversification

The 3 months correlation between UnitedHealth and DGTL is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and DGTL Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGTL Holdings 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 DGTL Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGTL Holdings has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and DGTL Holdings go up and down completely randomly.

Pair Corralation between UnitedHealth Group and DGTL Holdings

Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 151.31 times less return on investment than DGTL Holdings. But when comparing it to its historical volatility, UnitedHealth Group CDR is 31.97 times less risky than DGTL Holdings. It trades about 0.01 of its potential returns per unit of risk. DGTL Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  83.00  in DGTL Holdings on September 27, 2024 and sell it today you would lose (78.50) from holding DGTL Holdings or give up 94.58% of portfolio value over 90 days.

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

UnitedHealth Group CDR  vs.  DGTL Holdings

UnitedHealth Group CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UnitedHealth Group CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

DGTL Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DGTL Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with UnitedHealth Group and DGTL Holdings

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

The idea behind UnitedHealth Group CDR and DGTL Holdings 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.