Correlation Between ON Semiconductor and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both ON Semiconductor 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 ON Semiconductor and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ON Semiconductor and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on ON Semiconductor 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 ON Semiconductor with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ON Semiconductor and UnitedHealth Group.
Diversification Opportunities for ON Semiconductor and UnitedHealth Group
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between O2NS34 and UnitedHealth is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ON Semiconductor and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and ON Semiconductor 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 ON Semiconductor 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 ON Semiconductor i.e., ON Semiconductor and UnitedHealth Group go up and down completely randomly.
Pair Corralation between ON Semiconductor and UnitedHealth Group
Assuming the 90 days trading horizon ON Semiconductor is expected to under-perform the UnitedHealth Group. In addition to that, ON Semiconductor is 1.47 times more volatile than UnitedHealth Group Incorporated. It trades about -0.42 of its total potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.02 per unit of volatility. If you would invest 4,510 in UnitedHealth Group Incorporated on November 5, 2024 and sell it today you would earn a total of 27.00 from holding UnitedHealth Group Incorporated or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ON Semiconductor vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| ON Semiconductor |
| UnitedHealth Group |
ON Semiconductor and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ON Semiconductor and UnitedHealth Group
The main advantage of trading using opposite ON Semiconductor and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ON Semiconductor 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.| ON Semiconductor vs. Hormel Foods | ON Semiconductor vs. MAHLE Metal Leve | ON Semiconductor vs. Multilaser Industrial SA | ON Semiconductor vs. Clover Health Investments, |
| UnitedHealth Group vs. Broadridge Financial Solutions, | UnitedHealth Group vs. Truist Financial | UnitedHealth Group vs. Citizens Financial Group, | UnitedHealth Group vs. The Hartford Financial |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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