Correlation Between IShares Trust and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and UnitedHealth Group.
Diversification Opportunities for IShares Trust and UnitedHealth Group
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and UnitedHealth is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and IShares Trust 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 iShares 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 has no effect on the direction of IShares Trust i.e., IShares Trust and UnitedHealth Group go up and down completely randomly.
Pair Corralation between IShares Trust and UnitedHealth Group
Assuming the 90 days trading horizon IShares Trust is expected to generate 1.06 times less return on investment than UnitedHealth Group. But when comparing it to its historical volatility, iShares Trust is 1.22 times less risky than UnitedHealth Group. It trades about 0.18 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 827,918 in UnitedHealth Group Incorporated on September 3, 2024 and sell it today you would earn a total of 415,772 from holding UnitedHealth Group Incorporated or generate 50.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.32% |
| Values | Daily Returns |
iShares Trust vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| iShares Trust |
| UnitedHealth Group |
IShares Trust and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and UnitedHealth Group
The main advantage of trading using opposite IShares Trust and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust |
| UnitedHealth Group vs. The Select Sector | UnitedHealth Group vs. Promotora y Operadora | UnitedHealth Group vs. SPDR Series Trust | UnitedHealth Group vs. Vanguard World |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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