Correlation Between Fras Le and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Fras Le 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 Fras Le and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fras le SA and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Fras Le 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 Fras Le with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fras Le and UnitedHealth Group.
Diversification Opportunities for Fras Le and UnitedHealth Group
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fras and UnitedHealth is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Fras Le 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 Fras le SA 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 Fras Le i.e., Fras Le and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Fras Le and UnitedHealth Group
Assuming the 90 days trading horizon Fras le SA is expected to under-perform the UnitedHealth Group. But the stock apears to be less risky and, when comparing its historical volatility, Fras le SA is 1.28 times less risky than UnitedHealth Group. The stock trades about -0.18 of its potential returns per unit of risk. The UnitedHealth Group Incorporated is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,625 in UnitedHealth Group Incorporated on August 28, 2024 and sell it today you would earn a total of 396.00 from holding UnitedHealth Group Incorporated or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fras le SA vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Fras le SA |
| UnitedHealth Group |
Fras Le and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fras Le and UnitedHealth Group
The main advantage of trading using opposite Fras Le and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fras Le 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.The idea behind Fras le SA and UnitedHealth Group Incorporated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| UnitedHealth Group vs. Qualicorp Consultoria e | UnitedHealth Group vs. Fras le SA | UnitedHealth Group vs. Western Digital | UnitedHealth Group vs. Clave Indices De |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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