Correlation Between UnitedHealth Group and Vanguard World
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Vanguard World 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 Vanguard World 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 Vanguard World, you can compare the effects of market volatilities on UnitedHealth Group and Vanguard World 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 Vanguard World. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Vanguard World.
Diversification Opportunities for UnitedHealth Group and Vanguard World
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UnitedHealth and Vanguard is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Vanguard World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard World 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 Vanguard World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard World has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Vanguard World go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Vanguard World
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 1.99 times more return on investment than Vanguard World. However, UnitedHealth Group is 1.99 times more volatile than Vanguard World. It trades about 0.17 of its potential returns per unit of risk. Vanguard World is currently generating about 0.22 per unit of risk. If you would invest 1,148,300 in UnitedHealth Group Incorporated on September 2, 2024 and sell it today you would earn a total of 95,390 from holding UnitedHealth Group Incorporated or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. Vanguard World
Performance |
| Timeline |
| UnitedHealth Group |
| Vanguard World |
UnitedHealth Group and Vanguard World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Vanguard World
The main advantage of trading using opposite UnitedHealth Group and Vanguard World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Vanguard World 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 Vanguard World will offset losses from the drop in Vanguard World's long position.| UnitedHealth Group vs. The Select Sector | UnitedHealth Group vs. Promotora y Operadora | UnitedHealth Group vs. SPDR Series Trust | UnitedHealth Group vs. iShares 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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