Correlation Between UNITEDHEALTH and Eastern

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

Diversification Opportunities for UNITEDHEALTH and Eastern

0.4

Correlation Coefficient

UNITEDHEALTH  Eastern

Very weak diversification

The 3 months correlation between UNITEDHEALTH and Eastern is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding UNITEDHEALTH GROUP INC and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of UNITEDHEALTH i.e., UNITEDHEALTH and Eastern go up and down completely randomly.

Pair Corralation between UNITEDHEALTH and Eastern

Assuming the 90 days trading horizon UNITEDHEALTH is expected to generate 19.03 times less return on investment than Eastern. But when comparing it to its historical volatility, UNITEDHEALTH GROUP INC is 7.66 times less risky than Eastern. It trades about 0.02 of its potential returns per unit of risk. Eastern Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,873  in Eastern Co on September 26, 2024 and sell it today you would earn a total of  868.00  from holding Eastern Co or generate 46.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

UNITEDHEALTH GROUP INC  vs.  Eastern Co

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with UNITEDHEALTH and Eastern

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

The idea behind UNITEDHEALTH GROUP INC and Eastern Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.