Correlation Between UNITEDHEALTH and Garmin

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

Diversification Opportunities for UNITEDHEALTH and Garmin

-0.47

Correlation Coefficient

UNITEDHEALTH  Garmin

Very good diversification

The 3 months correlation between UNITEDHEALTH and Garmin is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding UNITEDHEALTH GROUP INC and Garmin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garmin 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 Garmin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garmin has no effect on the direction of UNITEDHEALTH i.e., UNITEDHEALTH and Garmin go up and down completely randomly.

Pair Corralation between UNITEDHEALTH and Garmin

Assuming the 90 days trading horizon UNITEDHEALTH is expected to generate 4.76 times less return on investment than Garmin. But when comparing it to its historical volatility, UNITEDHEALTH GROUP INC is 1.78 times less risky than Garmin. It trades about 0.06 of its potential returns per unit of risk. Garmin is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  16,102  in Garmin on October 23, 2024 and sell it today you would earn a total of  5,468  from holding Garmin or generate 33.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	68.33%
Values	Daily Returns

UNITEDHEALTH GROUP INC  vs.  Garmin

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UNITEDHEALTH GROUP INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, UNITEDHEALTH may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Garmin

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Garmin are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Garmin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNITEDHEALTH and Garmin

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

The idea behind UNITEDHEALTH GROUP INC and Garmin 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.