Correlation Between UnitedHealth Group and APA
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and APA 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 APA 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 APA Corporation, you can compare the effects of market volatilities on UnitedHealth Group and APA 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 APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and APA.
Diversification Opportunities for UnitedHealth Group and APA
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UnitedHealth and APA is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation 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 APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and APA go up and down completely randomly.
Pair Corralation between UnitedHealth Group and APA
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 0.89 times more return on investment than APA. However, UnitedHealth Group Incorporated is 1.13 times less risky than APA. It trades about 0.06 of its potential returns per unit of risk. APA Corporation is currently generating about -0.03 per unit of risk. If you would invest 825,521 in UnitedHealth Group Incorporated on September 12, 2024 and sell it today you would earn a total of 311,479 from holding UnitedHealth Group Incorporated or generate 37.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. APA Corp.
Performance |
| Timeline |
| UnitedHealth Group |
| APA Corporation |
UnitedHealth Group and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and APA
The main advantage of trading using opposite UnitedHealth Group and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.| UnitedHealth Group vs. The Select Sector | UnitedHealth Group vs. Promotora y Operadora | UnitedHealth Group vs. iShares Global Timber | UnitedHealth Group vs. SPDR Series 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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