Correlation Between State Street and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on State Street 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 State Street with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and UnitedHealth Group.
Diversification Opportunities for State Street and UnitedHealth Group
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between State and UnitedHealth is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding State Street and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and State Street 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 State Street 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 State Street i.e., State Street and UnitedHealth Group go up and down completely randomly.
Pair Corralation between State Street and UnitedHealth Group
Assuming the 90 days trading horizon State Street is expected to generate 1.22 times more return on investment than UnitedHealth Group. However, State Street is 1.22 times more volatile than UnitedHealth Group Incorporated. It trades about 0.22 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.2 per unit of risk. If you would invest 172,800 in State Street on August 31, 2024 and sell it today you would earn a total of 23,700 from holding State Street or generate 13.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| State Street |
| UnitedHealth Group |
State Street and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and UnitedHealth Group
The main advantage of trading using opposite State Street and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. UnitedHealth Group Incorporated | State Street vs. CVS Health | State Street vs. Verizon Communications | State Street vs. DXC Technology |
| UnitedHealth Group vs. The Select Sector | UnitedHealth Group vs. Promotora y Operadora | UnitedHealth Group vs. SPDR Series Trust | UnitedHealth Group vs. iShares Trust |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Transaction History View history of all your transactions and understand their impact on performance |