Correlation Between North American and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both North American 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 North American and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Construction and UnitedHealth Group CDR, you can compare the effects of market volatilities on North American 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 North American with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and UnitedHealth Group.
Diversification Opportunities for North American and UnitedHealth Group
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between North and UnitedHealth is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction 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 North American 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 North American Construction 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 North American i.e., North American and UnitedHealth Group go up and down completely randomly.
Pair Corralation between North American and UnitedHealth Group
Assuming the 90 days trading horizon North American Construction is expected to under-perform the UnitedHealth Group. In addition to that, North American is 1.06 times more volatile than UnitedHealth Group CDR. It trades about -0.05 of its total potential returns per unit of risk. UnitedHealth Group CDR is currently generating about 0.1 per unit of volatility. If you would invest 2,415 in UnitedHealth Group CDR on October 24, 2024 and sell it today you would earn a total of 81.00 from holding UnitedHealth Group CDR or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Construction vs. UnitedHealth Group CDR
Performance |
| Timeline |
| North American Const |
| UnitedHealth Group CDR |
North American and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and UnitedHealth Group
The main advantage of trading using opposite North American and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American 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.| North American vs. PHX Energy Services | North American vs. CES Energy Solutions | North American vs. Total Energy Services | North American vs. Pason Systems |
| UnitedHealth Group vs. North American Construction | UnitedHealth Group vs. CNJ Capital Investments | UnitedHealth Group vs. Leading Edge Materials | UnitedHealth Group vs. Element Fleet Management |
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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