Correlation Between Anthem and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Anthem and UnitedHealth Group 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 Anthem and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anthem Inc and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Anthem and UnitedHealth Group 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 Anthem with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anthem and UnitedHealth Group.
Diversification Opportunities for Anthem and UnitedHealth Group
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Anthem and UnitedHealth is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Anthem Inc and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Anthem 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 Anthem Inc are associated (or correlated) with UnitedHealth Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UnitedHealth Group has no effect on the direction of Anthem i.e., Anthem and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Anthem and UnitedHealth Group
Assuming the 90 days horizon Anthem Inc is expected to generate 0.79 times more return on investment than UnitedHealth Group. However, Anthem Inc is 1.26 times less risky than UnitedHealth Group. It trades about 0.16 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.1 per unit of risk. If you would invest 35,950 in Anthem Inc on November 6, 2024 and sell it today you would earn a total of 1,750 from holding Anthem Inc or generate 4.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Anthem Inc vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Anthem Inc |
| UnitedHealth Group |
Anthem and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anthem and UnitedHealth Group
The main advantage of trading using opposite Anthem and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anthem position performs unexpectedly, UnitedHealth Group 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 UnitedHealth Group will offset losses from the drop in UnitedHealth Group's long position.| Anthem vs. Lendlease Group | Anthem vs. Choice Hotels International | Anthem vs. Dalata Hotel Group | Anthem vs. HYATT HOTELS A |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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