Correlation Between UnitedHealth Group and SPDR Index
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and SPDR Index 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 SPDR Index 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 SPDR Index Shares, you can compare the effects of market volatilities on UnitedHealth Group and SPDR Index 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 SPDR Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and SPDR Index.
Diversification Opportunities for UnitedHealth Group and SPDR Index
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UnitedHealth and SPDR is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and SPDR Index Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Index Shares 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 SPDR Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Index Shares has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and SPDR Index go up and down completely randomly.
Pair Corralation between UnitedHealth Group and SPDR Index
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 3.59 times more return on investment than SPDR Index. However, UnitedHealth Group is 3.59 times more volatile than SPDR Index Shares. It trades about 0.21 of its potential returns per unit of risk. SPDR Index Shares is currently generating about -0.21 per unit of risk. If you would invest 1,130,100 in UnitedHealth Group Incorporated on August 30, 2024 and sell it today you would earn a total of 122,775 from holding UnitedHealth Group Incorporated or generate 10.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. SPDR Index Shares
Performance |
| Timeline |
| UnitedHealth Group |
| SPDR Index Shares |
UnitedHealth Group and SPDR Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and SPDR Index
The main advantage of trading using opposite UnitedHealth Group and SPDR Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, SPDR Index 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 SPDR Index will offset losses from the drop in SPDR Index's long position.| UnitedHealth Group vs. MercadoLibre | UnitedHealth Group vs. Southwest Airlines | UnitedHealth Group vs. The Walt Disney | UnitedHealth Group vs. Apple Inc |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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