Correlation Between UnitedHealth Group and Hologic

Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Hologic 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 Hologic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UnitedHealth Group Incorporated and Hologic, you can compare the effects of market volatilities on UnitedHealth Group and Hologic 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 Hologic. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Hologic.

Diversification Opportunities for UnitedHealth Group and Hologic

-0.43

Correlation Coefficient

UnitedHealth Group  Hologic

Very good diversification

The 3 months correlation between UnitedHealth and Hologic is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Hologic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hologic 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 Incorporated are associated (or correlated) with Hologic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hologic has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Hologic go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Hologic

Considering the 90-day investment horizon UnitedHealth Group Incorporated is expected to generate 1.14 times more return on investment than Hologic. However, UnitedHealth Group is 1.14 times more volatile than Hologic. It trades about 0.2 of its potential returns per unit of risk. Hologic is currently generating about -0.04 per unit of risk. If you would invest  56,213  in UnitedHealth Group Incorporated on August 30, 2024 and sell it today you would earn a total of  4,625  from holding UnitedHealth Group Incorporated or generate 8.23% return on investment over 90 days.

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

UnitedHealth Group Incorporate  vs.  Hologic

UnitedHealth Group

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UnitedHealth Group Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, UnitedHealth Group is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Hologic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hologic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Hologic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with UnitedHealth Group and Hologic

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

The idea behind UnitedHealth Group Incorporated and Hologic 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.