Correlation Between Dell Technologies and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Dell Technologies 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 Dell Technologies and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dell Technologies and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Dell Technologies 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 Dell Technologies with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dell Technologies and UnitedHealth Group.
Diversification Opportunities for Dell Technologies and UnitedHealth Group
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dell and UnitedHealth is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Dell Technologies 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 Dell Technologies 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 Dell Technologies i.e., Dell Technologies and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Dell Technologies and UnitedHealth Group
Assuming the 90 days trading horizon Dell Technologies is expected to generate 1.64 times more return on investment than UnitedHealth Group. However, Dell Technologies is 1.64 times more volatile than UnitedHealth Group Incorporated. It trades about 0.02 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about -0.37 per unit of risk. If you would invest 63,898 in Dell Technologies on November 28, 2024 and sell it today you would earn a total of 27.00 from holding Dell Technologies or generate 0.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dell Technologies vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Dell Technologies |
| UnitedHealth Group |
Dell Technologies and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dell Technologies and UnitedHealth Group
The main advantage of trading using opposite Dell Technologies and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dell Technologies 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.| Dell Technologies vs. GP Investments | Dell Technologies vs. Automatic Data Processing | Dell Technologies vs. PENN Entertainment, | Dell Technologies vs. Chunghwa Telecom Co, |
| UnitedHealth Group vs. Live Nation Entertainment, | UnitedHealth Group vs. Costco Wholesale | UnitedHealth Group vs. Melco Resorts Entertainment | UnitedHealth Group vs. Ross Stores |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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