Correlation Between UnitedHealth Group and Southern Copper
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Southern Copper 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 Southern Copper 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 Southern Copper, you can compare the effects of market volatilities on UnitedHealth Group and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Southern Copper.
Diversification Opportunities for UnitedHealth Group and Southern Copper
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between UnitedHealth and Southern is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Southern Copper go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Southern Copper
Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 2.93 times less return on investment than Southern Copper. But when comparing it to its historical volatility, UnitedHealth Group Incorporated is 1.18 times less risky than Southern Copper. It trades about 0.03 of its potential returns per unit of risk. Southern Copper is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 110,439 in Southern Copper on August 29, 2024 and sell it today you would earn a total of 99,751 from holding Southern Copper or generate 90.32% 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. Southern Copper
Performance |
| Timeline |
| UnitedHealth Group |
| Southern Copper |
UnitedHealth Group and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Southern Copper
The main advantage of trading using opposite UnitedHealth Group and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| UnitedHealth Group vs. First Republic Bank | UnitedHealth Group vs. Deutsche Bank Aktiengesellschaft | UnitedHealth Group vs. Grupo Sports World | UnitedHealth Group vs. DXC Technology |
| Southern Copper vs. Cognizant Technology Solutions | Southern Copper vs. Capital One Financial | Southern Copper vs. McEwen Mining | Southern Copper vs. Verizon Communications |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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