Correlation Between UnitedHealth Group and Topicus

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

Diversification Opportunities for UnitedHealth Group and Topicus

-0.02

Correlation Coefficient

UnitedHealth Group  Topicus

Good diversification

The 3 months correlation between UnitedHealth and Topicus is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Topicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topicus 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 Topicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topicus has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Topicus go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Topicus

Assuming the 90 days trading horizon UnitedHealth Group CDR is expected to generate 1.4 times more return on investment than Topicus. However, UnitedHealth Group is 1.4 times more volatile than Topicus. It trades about -0.09 of its potential returns per unit of risk. Topicus is currently generating about -0.16 per unit of risk. If you would invest  2,812  in UnitedHealth Group CDR on September 16, 2024 and sell it today you would lose (328.00) from holding UnitedHealth Group CDR or give up 11.66% of portfolio value over 90 days.

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

UnitedHealth Group CDR  vs.  Topicus

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Topicus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Topicus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with UnitedHealth Group and Topicus

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

The idea behind UnitedHealth Group CDR and Topicus 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.