Correlation Between UnitedHealth Group and United Airlines
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and United Airlines 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 United Airlines 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 United Airlines Holdings, you can compare the effects of market volatilities on UnitedHealth Group and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and United Airlines.
Diversification Opportunities for UnitedHealth Group and United Airlines
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UnitedHealth and United is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and United Airlines go up and down completely randomly.
Pair Corralation between UnitedHealth Group and United Airlines
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to under-perform the United Airlines. But the stock apears to be less risky and, when comparing its historical volatility, UnitedHealth Group Incorporated is 1.29 times less risky than United Airlines. The stock trades about -0.01 of its potential returns per unit of risk. The United Airlines Holdings is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 86,400 in United Airlines Holdings on November 2, 2024 and sell it today you would earn a total of 136,100 from holding United Airlines Holdings or generate 157.52% 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. United Airlines Holdings
Performance |
| Timeline |
| UnitedHealth Group |
| United Airlines Holdings |
UnitedHealth Group and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and United Airlines
The main advantage of trading using opposite UnitedHealth Group and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| UnitedHealth Group vs. Micron Technology | UnitedHealth Group vs. The Home Depot | UnitedHealth Group vs. Delta Air Lines | UnitedHealth Group vs. New Oriental Education |
| United Airlines vs. Taiwan Semiconductor Manufacturing | United Airlines vs. Verizon Communications | United Airlines vs. Prudential Financial | United Airlines vs. Southern Copper |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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