Correlation Between UnitedHealth Group and Target
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Target 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 Target 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 Target, you can compare the effects of market volatilities on UnitedHealth Group and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Target.
Diversification Opportunities for UnitedHealth Group and Target
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between UnitedHealth and Target is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Target go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Target
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 0.49 times more return on investment than Target. However, UnitedHealth Group Incorporated is 2.06 times less risky than Target. It trades about 0.14 of its potential returns per unit of risk. Target is currently generating about -0.12 per unit of risk. If you would invest 1,134,600 in UnitedHealth Group Incorporated on August 27, 2024 and sell it today you would earn a total of 77,811 from holding UnitedHealth Group Incorporated or generate 6.86% 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. Target
Performance |
| Timeline |
| UnitedHealth Group |
| Target |
UnitedHealth Group and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Target
The main advantage of trading using opposite UnitedHealth Group and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Target 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 Target will offset losses from the drop in Target'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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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