Correlation Between UNITEDHEALTH and Old Republic

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

Diversification Opportunities for UNITEDHEALTH and Old Republic

-0.34

Correlation Coefficient

UNITEDHEALTH  Old Republic

Very good diversification

The 3 months correlation between UNITEDHEALTH and Old is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding UNITEDHEALTH GROUP INC and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna 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 Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of UNITEDHEALTH i.e., UNITEDHEALTH and Old Republic go up and down completely randomly.

Pair Corralation between UNITEDHEALTH and Old Republic

Assuming the 90 days trading horizon UNITEDHEALTH GROUP INC is expected to generate 1.77 times more return on investment than Old Republic. However, UNITEDHEALTH is 1.77 times more volatile than Old Republic International. It trades about 0.04 of its potential returns per unit of risk. Old Republic International is currently generating about -0.14 per unit of risk. If you would invest  8,631  in UNITEDHEALTH GROUP INC on October 6, 2024 and sell it today you would earn a total of  108.00  from holding UNITEDHEALTH GROUP INC or generate 1.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

UNITEDHEALTH GROUP INC  vs.  Old Republic International

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UNITEDHEALTH GROUP INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UNITEDHEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Old Republic Interna

Risk-Adjusted Performance

6 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Old Republic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with UNITEDHEALTH and Old Republic

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

The idea behind UNITEDHEALTH GROUP INC and Old Republic International 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.