Correlation Between UnitedHealth Group and Coty

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

Diversification Opportunities for UnitedHealth Group and Coty

0.01

Correlation Coefficient

UnitedHealth Group  Coty

Significant diversification

The 3 months correlation between UnitedHealth and Coty is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Coty Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coty Inc 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 Coty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coty Inc has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Coty go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Coty

Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to under-perform the Coty. In addition to that, UnitedHealth Group is 1.13 times more volatile than Coty Inc. It trades about -0.08 of its total potential returns per unit of risk. Coty Inc is currently generating about 0.09 per unit of volatility. If you would invest  2,026  in Coty Inc on October 22, 2024 and sell it today you would earn a total of  158.00  from holding Coty Inc or generate 7.8% return on investment over 90 days.

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

UnitedHealth Group Incorporate  vs.  Coty Inc

UnitedHealth Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UnitedHealth Group Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, UnitedHealth Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Coty Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coty Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Coty 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 Coty

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

The idea behind UnitedHealth Group Incorporated and Coty Inc 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.