Correlation Between UNITEDHEALTH and Willamette Valley

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

Diversification Opportunities for UNITEDHEALTH and Willamette Valley

-0.11

Correlation Coefficient

UNITEDHEALTH  Willamette Valley

Good diversification

The 3 months correlation between UNITEDHEALTH and Willamette is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding UNITEDHEALTH GROUP INC and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley 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 Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of UNITEDHEALTH i.e., UNITEDHEALTH and Willamette Valley go up and down completely randomly.

Pair Corralation between UNITEDHEALTH and Willamette Valley

Assuming the 90 days trading horizon UNITEDHEALTH GROUP INC is expected to generate 0.39 times more return on investment than Willamette Valley. However, UNITEDHEALTH GROUP INC is 2.55 times less risky than Willamette Valley. It trades about 0.09 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about 0.03 per unit of risk. If you would invest  7,952  in UNITEDHEALTH GROUP INC on December 27, 2024 and sell it today you would earn a total of  384.00  from holding UNITEDHEALTH GROUP INC or generate 4.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

UNITEDHEALTH GROUP INC  vs.  Willamette Valley Vineyards

UNITEDHEALTH GROUP INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNITEDHEALTH GROUP INC are ranked lower than 7 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Willamette Valley

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Willamette Valley Vineyards are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Willamette Valley is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with UNITEDHEALTH and Willamette Valley

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

The idea behind UNITEDHEALTH GROUP INC and Willamette Valley Vineyards 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.