Correlation Between UnitedHealth Group and SPDR Series
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and SPDR Series 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 SPDR Series 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 SPDR Series Trust, you can compare the effects of market volatilities on UnitedHealth Group and SPDR Series 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 SPDR Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and SPDR Series.
Diversification Opportunities for UnitedHealth Group and SPDR Series
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UnitedHealth and SPDR is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and SPDR Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Series Trust 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 SPDR Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Series Trust has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and SPDR Series go up and down completely randomly.
Pair Corralation between UnitedHealth Group and SPDR Series
Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 1.4 times less return on investment than SPDR Series. But when comparing it to its historical volatility, UnitedHealth Group Incorporated is 1.2 times less risky than SPDR Series. It trades about 0.07 of its potential returns per unit of risk. SPDR Series Trust is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 335,567 in SPDR Series Trust on September 3, 2024 and sell it today you would earn a total of 159,533 from holding SPDR Series Trust or generate 47.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. SPDR Series Trust
Performance |
| Timeline |
| UnitedHealth Group |
| SPDR Series Trust |
UnitedHealth Group and SPDR Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and SPDR Series
The main advantage of trading using opposite UnitedHealth Group and SPDR Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, SPDR Series 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 SPDR Series will offset losses from the drop in SPDR Series' long position.| UnitedHealth Group vs. The Select Sector | UnitedHealth Group vs. Promotora y Operadora | UnitedHealth Group vs. SPDR Series Trust | UnitedHealth Group vs. Vanguard World |
| SPDR Series vs. SPDR Dow Jones | SPDR Series vs. SPDR Gold Trust | SPDR Series vs. SPDR SP 500 | SPDR Series vs. SPDR Series Trust |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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