Correlation Between Prudential Financial and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Prudential Financial 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 Prudential Financial and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Prudential Financial 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 Prudential Financial with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and UnitedHealth Group.
Diversification Opportunities for Prudential Financial and UnitedHealth Group
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prudential and UnitedHealth is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Prudential Financial 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 Prudential Financial 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 Prudential Financial i.e., Prudential Financial and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Prudential Financial and UnitedHealth Group
Assuming the 90 days trading horizon Prudential Financial is expected to generate 0.59 times more return on investment than UnitedHealth Group. However, Prudential Financial is 1.71 times less risky than UnitedHealth Group. It trades about 0.22 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about -0.21 per unit of risk. If you would invest 35,866 in Prudential Financial on September 14, 2024 and sell it today you would earn a total of 2,624 from holding Prudential Financial or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Financial vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Prudential Financial |
| UnitedHealth Group |
Prudential Financial and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and UnitedHealth Group
The main advantage of trading using opposite Prudential Financial and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial 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.| Prudential Financial vs. Fundo Investimento Imobiliario | Prudential Financial vs. LESTE FDO INV | Prudential Financial vs. Fras le SA | Prudential Financial vs. Western Digital |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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