Correlation Between UNITEDHEALTH and Thor Industries

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

Diversification Opportunities for UNITEDHEALTH and Thor Industries

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between UNITEDHEALTH and Thor is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding UNITEDHEALTH GROUP INC and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Industries 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 Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of UNITEDHEALTH i.e., UNITEDHEALTH and Thor Industries go up and down completely randomly.

Pair Corralation between UNITEDHEALTH and Thor Industries

Assuming the 90 days trading horizon UNITEDHEALTH GROUP INC is expected to generate 0.46 times more return on investment than Thor Industries. However, UNITEDHEALTH GROUP INC is 2.19 times less risky than Thor Industries. It trades about -0.19 of its potential returns per unit of risk. Thor Industries is currently generating about -0.21 per unit of risk. If you would invest  9,764  in UNITEDHEALTH GROUP INC on September 18, 2024 and sell it today you would lose (294.00) from holding UNITEDHEALTH GROUP INC or give up 3.01% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

UNITEDHEALTH GROUP INC  vs.  Thor Industries

 Performance 
       Timeline  
UNITEDHEALTH GROUP INC 

Risk-Adjusted Performance

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Weak
 
Strong
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.
Thor Industries 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Thor Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Thor Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

UNITEDHEALTH and Thor Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UNITEDHEALTH and Thor Industries

The main advantage of trading using opposite UNITEDHEALTH and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITEDHEALTH position performs unexpectedly, Thor Industries 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 Thor Industries will offset losses from the drop in Thor Industries' long position.
The idea behind UNITEDHEALTH GROUP INC and Thor Industries 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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