Correlation Between UNITEDHEALTH and Ingredion Incorporated

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

By analyzing existing cross correlation between UNITEDHEALTH GROUP INC and Ingredion Incorporated, you can compare the effects of market volatilities on UNITEDHEALTH and Ingredion Incorporated 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 with a short position of Ingredion Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITEDHEALTH and Ingredion Incorporated.

Diversification Opportunities for UNITEDHEALTH and Ingredion Incorporated

0.66

Correlation Coefficient

UNITEDHEALTH  Ingredion Incorporated

Poor diversification

The 3 months correlation between UNITEDHEALTH and Ingredion is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding UNITEDHEALTH GROUP INC and Ingredion Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingredion Incorporated and UNITEDHEALTH 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 INC are associated (or correlated) with Ingredion Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingredion Incorporated has no effect on the direction of UNITEDHEALTH i.e., UNITEDHEALTH and Ingredion Incorporated go up and down completely randomly.

Pair Corralation between UNITEDHEALTH and Ingredion Incorporated

Assuming the 90 days trading horizon UNITEDHEALTH GROUP INC is expected to under-perform the Ingredion Incorporated. But the bond apears to be less risky and, when comparing its historical volatility, UNITEDHEALTH GROUP INC is 4.11 times less risky than Ingredion Incorporated. The bond trades about -0.1 of its potential returns per unit of risk. The Ingredion Incorporated is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  13,480  in Ingredion Incorporated on October 24, 2024 and sell it today you would earn a total of  64.00  from holding Ingredion Incorporated or generate 0.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.67%
Values	Daily Returns

UNITEDHEALTH GROUP INC  vs.  Ingredion Incorporated

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ingredion Incorporated

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ingredion Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Ingredion Incorporated is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with UNITEDHEALTH and Ingredion Incorporated

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

The idea behind UNITEDHEALTH GROUP INC and Ingredion Incorporated 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .