Correlation Between UnitedHealth Group and Grupo Posadas

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Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Grupo Posadas 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 Grupo Posadas 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 Grupo Posadas SAB, you can compare the effects of market volatilities on UnitedHealth Group and Grupo Posadas 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 Grupo Posadas. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Grupo Posadas.

Diversification Opportunities for UnitedHealth Group and Grupo Posadas

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between UnitedHealth and Grupo is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Grupo Posadas SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Posadas SAB 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 Grupo Posadas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Posadas SAB has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Grupo Posadas go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Grupo Posadas

Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 1.96 times more return on investment than Grupo Posadas. However, UnitedHealth Group is 1.96 times more volatile than Grupo Posadas SAB. It trades about 0.1 of its potential returns per unit of risk. Grupo Posadas SAB is currently generating about -0.17 per unit of risk. If you would invest  1,026,000  in UnitedHealth Group Incorporated on October 25, 2024 and sell it today you would earn a total of  37,864  from holding UnitedHealth Group Incorporated or generate 3.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

UnitedHealth Group Incorporate  vs.  Grupo Posadas SAB

 Performance 
       Timeline  
UnitedHealth Group 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days UnitedHealth Group Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, UnitedHealth Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Grupo Posadas SAB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grupo Posadas SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

UnitedHealth Group and Grupo Posadas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UnitedHealth Group and Grupo Posadas

The main advantage of trading using opposite UnitedHealth Group and Grupo Posadas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Grupo Posadas 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 Grupo Posadas will offset losses from the drop in Grupo Posadas' long position.
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The idea behind UnitedHealth Group Incorporated and Grupo Posadas SAB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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