Correlation Between UnitedHealth Group and Ameriprise Financial
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Ameriprise Financial 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 UnitedHealth Group and Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UnitedHealth Group Incorporated and Ameriprise Financial, you can compare the effects of market volatilities on UnitedHealth Group and Ameriprise Financial 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 UnitedHealth Group with a short position of Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Ameriprise Financial.
Diversification Opportunities for UnitedHealth Group and Ameriprise Financial
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UnitedHealth and Ameriprise is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and UnitedHealth Group 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 UnitedHealth Group Incorporated are associated (or correlated) with Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Ameriprise Financial go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Ameriprise Financial
Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 2.46 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, UnitedHealth Group Incorporated is 2.2 times less risky than Ameriprise Financial. It trades about 0.2 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 928,741 in Ameriprise Financial on August 31, 2024 and sell it today you would earn a total of 229,412 from holding Ameriprise Financial or generate 24.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. Ameriprise Financial
Performance |
| Timeline |
| UnitedHealth Group |
| Ameriprise Financial |
UnitedHealth Group and Ameriprise Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Ameriprise Financial
The main advantage of trading using opposite UnitedHealth Group and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Ameriprise Financial 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 Ameriprise Financial will offset losses from the drop in Ameriprise Financial's long position.| UnitedHealth Group vs. The Select Sector | UnitedHealth Group vs. Promotora y Operadora | UnitedHealth Group vs. SPDR Series Trust | UnitedHealth Group vs. iShares Trust |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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