Correlation Between Applied Materials and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Applied Materials 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 Applied Materials and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Applied Materials 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 Applied Materials with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and UnitedHealth Group.
Diversification Opportunities for Applied Materials and UnitedHealth Group
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Applied and UnitedHealth is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Applied Materials 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 Applied Materials 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 Applied Materials i.e., Applied Materials and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Applied Materials and UnitedHealth Group
Assuming the 90 days trading horizon Applied Materials is expected to under-perform the UnitedHealth Group. In addition to that, Applied Materials is 1.25 times more volatile than UnitedHealth Group Incorporated. It trades about -0.09 of its total potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.16 per unit of volatility. If you would invest 1,134,600 in UnitedHealth Group Incorporated on August 28, 2024 and sell it today you would earn a total of 85,900 from holding UnitedHealth Group Incorporated or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Applied Materials |
| UnitedHealth Group |
Applied Materials and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and UnitedHealth Group
The main advantage of trading using opposite Applied Materials and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials 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.| Applied Materials vs. Micron Technology | Applied Materials vs. Capital One Financial | Applied Materials vs. Lloyds Banking Group | Applied Materials vs. DXC Technology |
| UnitedHealth Group vs. The Select Sector | UnitedHealth Group vs. Promotora y Operadora | UnitedHealth Group vs. iShares Global Timber | UnitedHealth Group vs. SPDR Series Trust |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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