Correlation Between Centene Corp and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Centene Corp 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 Centene Corp and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centene Corp and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Centene Corp 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 Centene Corp with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centene Corp and UnitedHealth Group.
Diversification Opportunities for Centene Corp and UnitedHealth Group
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Centene and UnitedHealth is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Centene Corp and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Centene Corp 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 Centene Corp 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 Centene Corp i.e., Centene Corp and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Centene Corp and UnitedHealth Group
Considering the 90-day investment horizon Centene Corp is expected to generate 4.04 times less return on investment than UnitedHealth Group. In addition to that, Centene Corp is 1.3 times more volatile than UnitedHealth Group Incorporated. It trades about 0.03 of its total potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.15 per unit of volatility. If you would invest 56,464 in UnitedHealth Group Incorporated on August 24, 2024 and sell it today you would earn a total of 3,285 from holding UnitedHealth Group Incorporated or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centene Corp vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Centene Corp |
| UnitedHealth Group |
Centene Corp and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centene Corp and UnitedHealth Group
The main advantage of trading using opposite Centene Corp and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centene Corp 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.| Centene Corp vs. Skillz Platform | Centene Corp vs. BlackBerry | Centene Corp vs. Fubotv Inc | Centene Corp vs. SNDL Inc |
| UnitedHealth Group vs. Cigna Corp | UnitedHealth Group vs. Humana Inc | UnitedHealth Group vs. Elevance Health | UnitedHealth Group vs. Centene Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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