Correlation Between Home Depot and UNITEDHEALTH

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Can any of the company-specific risk be diversified away by investing in both Home Depot and UNITEDHEALTH 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 Home Depot and UNITEDHEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and UNITEDHEALTH GROUP INC, you can compare the effects of market volatilities on Home Depot and UNITEDHEALTH 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 Home Depot with a short position of UNITEDHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and UNITEDHEALTH.

Diversification Opportunities for Home Depot and UNITEDHEALTH

HomeUNITEDHEALTHDiversified AwayHomeUNITEDHEALTHDiversified Away100%
0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Home and UNITEDHEALTH is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and UNITEDHEALTH GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITEDHEALTH GROUP INC and Home Depot 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 Home Depot are associated (or correlated) with UNITEDHEALTH. 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 INC has no effect on the direction of Home Depot i.e., Home Depot and UNITEDHEALTH go up and down completely randomly.

Pair Corralation between Home Depot and UNITEDHEALTH

Allowing for the 90-day total investment horizon Home Depot is expected to under-perform the UNITEDHEALTH. In addition to that, Home Depot is 1.49 times more volatile than UNITEDHEALTH GROUP INC. It trades about -0.46 of its total potential returns per unit of risk. UNITEDHEALTH GROUP INC is currently generating about 0.01 per unit of volatility. If you would invest  9,855  in UNITEDHEALTH GROUP INC on December 15, 2024 and sell it today you would earn a total of  4.00  from holding UNITEDHEALTH GROUP INC or generate 0.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Home Depot  vs.  UNITEDHEALTH GROUP INC

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-8-6-4-202
JavaScript chart by amCharts 3.21.15HD 91324PCV2
       Timeline  
Home Depot 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Home Depot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15JanFebMarFebMar350360370380390400410420
UNITEDHEALTH GROUP INC 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days UNITEDHEALTH GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UNITEDHEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.153024402395.59696.59797.59898.599

Home Depot and UNITEDHEALTH Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.57-1.98-1.39-0.79-0.20.330.891.452.012.57 0.51.01.52.02.5
JavaScript chart by amCharts 3.21.15HD 91324PCV2
       Returns  

Pair Trading with Home Depot and UNITEDHEALTH

The main advantage of trading using opposite Home Depot and UNITEDHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, UNITEDHEALTH 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 will offset losses from the drop in UNITEDHEALTH's long position.
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The idea behind Home Depot and UNITEDHEALTH GROUP INC 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.
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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