Correlation Between UnitedHealth Group and Travelers Companies
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Travelers Companies 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 Travelers Companies 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 The Travelers Companies, you can compare the effects of market volatilities on UnitedHealth Group and Travelers Companies 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 Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Travelers Companies.
Diversification Opportunities for UnitedHealth Group and Travelers Companies
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UnitedHealth and Travelers is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and The Travelers Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Travelers Companies 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 Travelers Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Travelers Companies has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Travelers Companies go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Travelers Companies
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 2.3 times more return on investment than Travelers Companies. However, UnitedHealth Group is 2.3 times more volatile than The Travelers Companies. It trades about 0.18 of its potential returns per unit of risk. The Travelers Companies is currently generating about -0.28 per unit of risk. If you would invest 1,050,000 in UnitedHealth Group Incorporated on October 30, 2024 and sell it today you would earn a total of 79,200 from holding UnitedHealth Group Incorporated or generate 7.54% 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. The Travelers Companies
Performance |
| Timeline |
| UnitedHealth Group |
| The Travelers Companies |
UnitedHealth Group and Travelers Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Travelers Companies
The main advantage of trading using opposite UnitedHealth Group and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Travelers Companies 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 Travelers Companies will offset losses from the drop in Travelers Companies' long position.| UnitedHealth Group vs. Delta Air Lines | UnitedHealth Group vs. Fideicomiso Irrevocable No | UnitedHealth Group vs. Fibra Shop | UnitedHealth Group vs. Barclays PLC |
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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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