Correlation Between International Business and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and UnitedHealth Group CDR, you can compare the effects of market volatilities on International Business 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 International Business with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and UnitedHealth Group.
Diversification Opportunities for International Business and UnitedHealth Group
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and UnitedHealth is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine 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 International Business 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 International Business Machines 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 International Business i.e., International Business and UnitedHealth Group go up and down completely randomly.
Pair Corralation between International Business and UnitedHealth Group
Assuming the 90 days trading horizon International Business Machines is expected to generate 0.89 times more return on investment than UnitedHealth Group. However, International Business Machines is 1.13 times less risky than UnitedHealth Group. It trades about 0.09 of its potential returns per unit of risk. UnitedHealth Group CDR is currently generating about 0.06 per unit of risk. If you would invest 2,757 in International Business Machines on August 28, 2024 and sell it today you would earn a total of 716.00 from holding International Business Machines or generate 25.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. UnitedHealth Group CDR
Performance |
| Timeline |
| International Business |
| UnitedHealth Group CDR |
International Business and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and UnitedHealth Group
The main advantage of trading using opposite International Business and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.| International Business vs. Telus Corp | International Business vs. Toronto Dominion Bank | International Business vs. Manulife Financial Corp | International Business vs. Canadian Natural Resources |
| UnitedHealth Group vs. Boat Rocker Media | UnitedHealth Group vs. Profound Medical Corp | UnitedHealth Group vs. Bip Investment Corp | UnitedHealth Group vs. Canaf Investments |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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