Correlation Between Ross Stores and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Ross Stores 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 Ross Stores and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Ross Stores 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 Ross Stores with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and UnitedHealth Group.
Diversification Opportunities for Ross Stores and UnitedHealth Group
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ross and UnitedHealth is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Ross Stores and UnitedHealth Group
Assuming the 90 days trading horizon Ross Stores is expected to generate 0.85 times more return on investment than UnitedHealth Group. However, Ross Stores is 1.18 times less risky than UnitedHealth Group. It trades about 0.36 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.27 per unit of risk. If you would invest 40,221 in Ross Stores on August 30, 2024 and sell it today you would earn a total of 5,589 from holding Ross Stores or generate 13.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Ross Stores |
| UnitedHealth Group |
Ross Stores and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and UnitedHealth Group
The main advantage of trading using opposite Ross Stores and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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.| Ross Stores vs. Monster Beverage | Ross Stores vs. Mitsubishi UFJ Financial | Ross Stores vs. Tyson Foods | Ross Stores vs. Sumitomo Mitsui Financial |
| UnitedHealth Group vs. Charter Communications | UnitedHealth Group vs. Electronic Arts | UnitedHealth Group vs. Bank of America | UnitedHealth Group vs. Mitsubishi UFJ 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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