Correlation Between UnitedHealth Group and First Trust
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and First Trust 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 First Trust 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 First Trust FTSE, you can compare the effects of market volatilities on UnitedHealth Group and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and First Trust.
Diversification Opportunities for UnitedHealth Group and First Trust
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UnitedHealth and First is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and First Trust FTSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust FTSE 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust FTSE has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and First Trust go up and down completely randomly.
Pair Corralation between UnitedHealth Group and First Trust
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 11.48 times more return on investment than First Trust. However, UnitedHealth Group is 11.48 times more volatile than First Trust FTSE. It trades about 0.03 of its potential returns per unit of risk. First Trust FTSE is currently generating about -0.03 per unit of risk. If you would invest 1,036,600 in UnitedHealth Group Incorporated on September 2, 2024 and sell it today you would earn a total of 207,090 from holding UnitedHealth Group Incorporated or generate 19.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. First Trust FTSE
Performance |
| Timeline |
| UnitedHealth Group |
| First Trust FTSE |
UnitedHealth Group and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and First Trust
The main advantage of trading using opposite UnitedHealth Group and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust'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 |
| First Trust vs. Promotora y Operadora | First Trust vs. UnitedHealth Group Incorporated | First Trust vs. Qulitas Controladora SAB | First Trust vs. Hoteles City Express |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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