Correlation Between UnitedHealth Group and Inovalis Real

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

Diversification Opportunities for UnitedHealth Group and Inovalis Real

0.11

Correlation Coefficient

UnitedHealth Group  Inovalis Real

Average diversification

The 3 months correlation between UnitedHealth and Inovalis is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Inovalis Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inovalis Real Estate 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 Inovalis Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inovalis Real Estate has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Inovalis Real go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Inovalis Real

Assuming the 90 days trading horizon UnitedHealth Group CDR is expected to generate 0.53 times more return on investment than Inovalis Real. However, UnitedHealth Group CDR is 1.9 times less risky than Inovalis Real. It trades about -0.04 of its potential returns per unit of risk. Inovalis Real Estate is currently generating about -0.08 per unit of risk. If you would invest  2,691  in UnitedHealth Group CDR on October 26, 2024 and sell it today you would lose (176.00) from holding UnitedHealth Group CDR or give up 6.54% 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.  Inovalis Real Estate

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 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.

Inovalis Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with UnitedHealth Group and Inovalis Real

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

The idea behind UnitedHealth Group CDR and Inovalis Real Estate 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.