Correlation Between UnitedHealth Group and T Mobile

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

Diversification Opportunities for UnitedHealth Group and T Mobile

0.59

Correlation Coefficient

UnitedHealth Group  T Mobile

Very weak diversification

The 3 months correlation between UnitedHealth and T1MU34 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile 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 T Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and T Mobile go up and down completely randomly.

Pair Corralation between UnitedHealth Group and T Mobile

Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 2.43 times less return on investment than T Mobile. In addition to that, UnitedHealth Group is 1.41 times more volatile than T Mobile. It trades about 0.05 of its total potential returns per unit of risk. T Mobile is currently generating about 0.18 per unit of volatility. If you would invest  49,086  in T Mobile on September 26, 2024 and sell it today you would earn a total of  19,572  from holding T Mobile or generate 39.87% return on investment over 90 days.

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

UnitedHealth Group Incorporate  vs.  T Mobile

UnitedHealth Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UnitedHealth Group Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, UnitedHealth Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

T Mobile

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, T Mobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UnitedHealth Group and T Mobile

The main advantage of trading using opposite UnitedHealth Group and T Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, T Mobile 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 T Mobile will offset losses from the drop in T Mobile's long position.

The idea behind UnitedHealth Group Incorporated and T Mobile 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.