Correlation Between Pfizer and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Pfizer 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 Pfizer and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc CDR and UnitedHealth Group CDR, you can compare the effects of market volatilities on Pfizer 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 Pfizer with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and UnitedHealth Group.
Diversification Opportunities for Pfizer and UnitedHealth Group
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pfizer and UnitedHealth is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc CDR 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 Pfizer 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 Pfizer Inc CDR 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 Pfizer i.e., Pfizer and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Pfizer and UnitedHealth Group
Assuming the 90 days trading horizon Pfizer Inc CDR is expected to under-perform the UnitedHealth Group. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc CDR is 1.17 times less risky than UnitedHealth Group. The stock trades about -0.23 of its potential returns per unit of risk. The UnitedHealth Group CDR is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,701 in UnitedHealth Group CDR on August 28, 2024 and sell it today you would earn a total of 186.00 from holding UnitedHealth Group CDR or generate 6.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc CDR vs. UnitedHealth Group CDR
Performance |
| Timeline |
| Pfizer Inc CDR |
| UnitedHealth Group CDR |
Pfizer and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and UnitedHealth Group
The main advantage of trading using opposite Pfizer and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer 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.| Pfizer vs. Auxly Cannabis Group | Pfizer vs. Entourage Health Corp | Pfizer vs. iShares Canadian HYBrid | Pfizer vs. Altagas Cum Red |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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