Correlation Between UnitedHealth Group and Boeing
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Boeing 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 Boeing 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 The Boeing, you can compare the effects of market volatilities on UnitedHealth Group and Boeing 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 Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Boeing.
Diversification Opportunities for UnitedHealth Group and Boeing
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between UnitedHealth and Boeing is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing 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 Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Boeing go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Boeing
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 1.14 times more return on investment than Boeing. However, UnitedHealth Group is 1.14 times more volatile than The Boeing. It trades about 0.19 of its potential returns per unit of risk. The Boeing is currently generating about 0.14 per unit of risk. If you would invest 1,135,997 in UnitedHealth Group Incorporated on September 1, 2024 and sell it today you would earn a total of 107,693 from holding UnitedHealth Group Incorporated or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. The Boeing
Performance |
| Timeline |
| UnitedHealth Group |
| Boeing |
UnitedHealth Group and Boeing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Boeing
The main advantage of trading using opposite UnitedHealth Group and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.| UnitedHealth Group vs. Hoteles City Express | UnitedHealth Group vs. GMxico Transportes SAB | UnitedHealth Group vs. DXC Technology | UnitedHealth Group vs. Lloyds Banking Group |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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