Correlation Between HSBC Holdings and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings 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 HSBC Holdings and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC Holdings plc and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on HSBC Holdings 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 HSBC Holdings with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and UnitedHealth Group.
Diversification Opportunities for HSBC Holdings and UnitedHealth Group
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HSBC and UnitedHealth is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and HSBC Holdings 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 HSBC Holdings plc 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 HSBC Holdings i.e., HSBC Holdings and UnitedHealth Group go up and down completely randomly.
Pair Corralation between HSBC Holdings and UnitedHealth Group
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.53 times more return on investment than UnitedHealth Group. However, HSBC Holdings plc is 1.87 times less risky than UnitedHealth Group. It trades about 0.31 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.1 per unit of risk. If you would invest 4,700 in HSBC Holdings plc on November 6, 2024 and sell it today you would earn a total of 300.00 from holding HSBC Holdings plc or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings plc vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| HSBC Holdings plc |
| UnitedHealth Group |
HSBC Holdings and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and UnitedHealth Group
The main advantage of trading using opposite HSBC Holdings and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings 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.| HSBC Holdings vs. Coeur Mining | HSBC Holdings vs. MAGNUM MINING EXP | HSBC Holdings vs. GALENA MINING LTD | HSBC Holdings vs. EEDUCATION ALBERT AB |
| UnitedHealth Group vs. MidCap Financial Investment | UnitedHealth Group vs. AGNC INVESTMENT | UnitedHealth Group vs. GALENA MINING LTD | UnitedHealth Group vs. Guangdong Investment Limited |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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