Correlation Between UnitedHealth Group and FibroGen
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and FibroGen 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 FibroGen 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 FibroGen, you can compare the effects of market volatilities on UnitedHealth Group and FibroGen 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 FibroGen. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and FibroGen.
Diversification Opportunities for UnitedHealth Group and FibroGen
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between UnitedHealth and FibroGen is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and FibroGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibroGen 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 FibroGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibroGen has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and FibroGen go up and down completely randomly.
Pair Corralation between UnitedHealth Group and FibroGen
Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 2.1 times less return on investment than FibroGen. But when comparing it to its historical volatility, UnitedHealth Group Incorporated is 1.78 times less risky than FibroGen. It trades about 0.21 of its potential returns per unit of risk. FibroGen is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 640.00 in FibroGen on August 30, 2024 and sell it today you would earn a total of 150.00 from holding FibroGen or generate 23.44% 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. FibroGen
Performance |
| Timeline |
| UnitedHealth Group |
| FibroGen |
UnitedHealth Group and FibroGen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and FibroGen
The main advantage of trading using opposite UnitedHealth Group and FibroGen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, FibroGen 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 FibroGen will offset losses from the drop in FibroGen's long position.| UnitedHealth Group vs. MercadoLibre | UnitedHealth Group vs. Southwest Airlines | UnitedHealth Group vs. The Walt Disney | UnitedHealth Group vs. Apple Inc |
| FibroGen vs. UnitedHealth Group Incorporated | FibroGen vs. Grupo Sports World | FibroGen vs. Taiwan Semiconductor Manufacturing | FibroGen vs. DXC Technology |
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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