Correlation Between DRI Healthcare and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both DRI Healthcare 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 DRI Healthcare and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DRI Healthcare Trust and UnitedHealth Group CDR, you can compare the effects of market volatilities on DRI Healthcare 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 DRI Healthcare with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of DRI Healthcare and UnitedHealth Group.
Diversification Opportunities for DRI Healthcare and UnitedHealth Group
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DRI and UnitedHealth is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding DRI Healthcare Trust 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 DRI Healthcare 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 DRI Healthcare Trust 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 DRI Healthcare i.e., DRI Healthcare and UnitedHealth Group go up and down completely randomly.
Pair Corralation between DRI Healthcare and UnitedHealth Group
Assuming the 90 days trading horizon DRI Healthcare Trust is expected to under-perform the UnitedHealth Group. But the stock apears to be less risky and, when comparing its historical volatility, DRI Healthcare Trust is 1.04 times less risky than UnitedHealth Group. The stock trades about -0.22 of its potential returns per unit of risk. The UnitedHealth Group CDR is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,699 in UnitedHealth Group CDR on September 1, 2024 and sell it today you would earn a total of 202.00 from holding UnitedHealth Group CDR or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DRI Healthcare Trust vs. UnitedHealth Group CDR
Performance |
| Timeline |
| DRI Healthcare Trust |
| UnitedHealth Group CDR |
DRI Healthcare and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DRI Healthcare and UnitedHealth Group
The main advantage of trading using opposite DRI Healthcare and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DRI Healthcare 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.| DRI Healthcare vs. iShares Canadian HYBrid | DRI Healthcare vs. Altagas Cum Red | DRI Healthcare vs. European Residential Real | DRI Healthcare vs. iShares Fundamental Hedged |
| UnitedHealth Group vs. Exco Technologies Limited | UnitedHealth Group vs. Quorum Information Technologies | UnitedHealth Group vs. Rogers Communications | UnitedHealth Group vs. Ocumetics Technology 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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