Correlation Between Global X and UnitedHealth Group

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Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Global X 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 Global X with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and UnitedHealth Group.

Diversification Opportunities for Global X and UnitedHealth Group

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Global and UnitedHealth is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Global X 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 Global X Funds 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 Global X i.e., Global X and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Global X and UnitedHealth Group

Assuming the 90 days trading horizon Global X Funds is expected to generate 0.6 times more return on investment than UnitedHealth Group. However, Global X Funds is 1.68 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 -0.09 per unit of risk. If you would invest  4,855  in Global X Funds on September 12, 2024 and sell it today you would earn a total of  225.00  from holding Global X Funds or generate 4.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Global X Funds  vs.  UnitedHealth Group Incorporate

 Performance 
       Timeline  
Global X Funds 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global X sustained solid returns over the last few months and may actually be approaching a breakup point.
UnitedHealth Group 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in UnitedHealth Group Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, UnitedHealth Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Global X and UnitedHealth Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global X and UnitedHealth Group

The main advantage of trading using opposite Global X and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.
The idea behind Global X Funds and UnitedHealth Group Incorporated 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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