Correlation Between Capital One and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Capital One 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 Capital One and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital One Financial and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Capital One 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 Capital One with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and UnitedHealth Group.
Diversification Opportunities for Capital One and UnitedHealth Group
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Capital and UnitedHealth is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Capital One 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 Capital One Financial 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 Capital One i.e., Capital One and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Capital One and UnitedHealth Group
Assuming the 90 days trading horizon Capital One Financial is expected to generate 1.21 times more return on investment than UnitedHealth Group. However, Capital One is 1.21 times more volatile than UnitedHealth Group Incorporated. It trades about 0.1 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.04 per unit of risk. If you would invest 23,150 in Capital One Financial on October 14, 2024 and sell it today you would earn a total of 33,130 from holding Capital One Financial or generate 143.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Capital One Financial vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Capital One Financial |
| UnitedHealth Group |
Capital One and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and UnitedHealth Group
The main advantage of trading using opposite Capital One and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One 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.| Capital One vs. Charter Communications | Capital One vs. salesforce inc | Capital One vs. Seagate Technology Holdings | Capital One vs. Ross Stores |
| UnitedHealth Group vs. Capital One Financial | UnitedHealth Group vs. Burlington Stores, | UnitedHealth Group vs. Prudential Financial | UnitedHealth Group vs. Broadridge Financial Solutions, |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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