Correlation Between UnitedHealth Group and First Solar
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and First Solar 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 Solar 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 Solar, you can compare the effects of market volatilities on UnitedHealth Group and First Solar 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 Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and First Solar.
Diversification Opportunities for UnitedHealth Group and First Solar
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UnitedHealth and First is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar 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 Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and First Solar go up and down completely randomly.
Pair Corralation between UnitedHealth Group and First Solar
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to under-perform the First Solar. But the stock apears to be less risky and, when comparing its historical volatility, UnitedHealth Group Incorporated is 1.09 times less risky than First Solar. The stock trades about -0.22 of its potential returns per unit of risk. The First Solar is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 392,500 in First Solar on September 12, 2024 and sell it today you would earn a total of 12,400 from holding First Solar or generate 3.16% 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. First Solar
Performance |
| Timeline |
| UnitedHealth Group |
| First Solar |
UnitedHealth Group and First Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and First Solar
The main advantage of trading using opposite UnitedHealth Group and First Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, First Solar 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 Solar will offset losses from the drop in First Solar'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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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