Correlation Between Definity Financial and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Definity Financial 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 Definity Financial and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Definity Financial Corp and UnitedHealth Group CDR, you can compare the effects of market volatilities on Definity Financial 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 Definity Financial with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Definity Financial and UnitedHealth Group.
Diversification Opportunities for Definity Financial and UnitedHealth Group
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Definity and UnitedHealth is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Definity Financial Corp and UnitedHealth Group CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group CDR and Definity Financial 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 Definity Financial 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 CDR has no effect on the direction of Definity Financial i.e., Definity Financial and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Definity Financial and UnitedHealth Group
Assuming the 90 days trading horizon Definity Financial Corp is expected to generate 0.4 times more return on investment than UnitedHealth Group. However, Definity Financial Corp is 2.53 times less risky than UnitedHealth Group. It trades about -0.23 of its potential returns per unit of risk. UnitedHealth Group CDR is currently generating about -0.16 per unit of risk. If you would invest 5,864 in Definity Financial Corp on October 11, 2024 and sell it today you would lose (236.00) from holding Definity Financial Corp or give up 4.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Definity Financial Corp vs. UnitedHealth Group CDR
Performance |
| Timeline |
| Definity Financial Corp |
| UnitedHealth Group CDR |
Definity Financial and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Definity Financial and UnitedHealth Group
The main advantage of trading using opposite Definity Financial and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Definity Financial 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.| Definity Financial vs. Trisura Group | Definity Financial vs. Pet Valu Holdings | Definity Financial vs. Intact Financial | Definity Financial vs. Topaz Energy Corp |
| UnitedHealth Group vs. Leveljump Healthcare Corp | UnitedHealth Group vs. CNJ Capital Investments | UnitedHealth Group vs. Nova Leap Health | UnitedHealth Group vs. CVS HEALTH CDR |
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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