Correlation Between UnitedHealth Group and Walmart

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

Diversification Opportunities for UnitedHealth Group and Walmart

-0.15

Correlation Coefficient

UnitedHealth Group  Walmart

Good diversification

The 3 months correlation between UnitedHealth and Walmart is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Walmart Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart Inc CDR 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart Inc CDR has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Walmart go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Walmart

Assuming the 90 days trading horizon UnitedHealth Group CDR is expected to under-perform the Walmart. In addition to that, UnitedHealth Group is 1.56 times more volatile than Walmart Inc CDR. It trades about -0.18 of its total potential returns per unit of risk. Walmart Inc CDR is currently generating about 0.05 per unit of volatility. If you would invest  4,028  in Walmart Inc CDR on November 29, 2024 and sell it today you would earn a total of  159.00  from holding Walmart Inc CDR or generate 3.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

UnitedHealth Group CDR  vs.  Walmart Inc CDR

UnitedHealth Group CDR

Risk-Adjusted Performance

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Walmart Inc CDR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Walmart 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 Walmart

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

The idea behind UnitedHealth Group CDR and Walmart Inc CDR 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.