Correlation Between UnitedHealth Group and Bip Investment
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Bip Investment 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 Bip Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UnitedHealth Group CDR and Bip Investment Corp, you can compare the effects of market volatilities on UnitedHealth Group and Bip Investment 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 Bip Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Bip Investment.
Diversification Opportunities for UnitedHealth Group and Bip Investment
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between UnitedHealth and Bip is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Bip Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bip Investment Corp 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 CDR are associated (or correlated) with Bip Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bip Investment Corp has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Bip Investment go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Bip Investment
Assuming the 90 days trading horizon UnitedHealth Group CDR is expected to generate 3.15 times more return on investment than Bip Investment. However, UnitedHealth Group is 3.15 times more volatile than Bip Investment Corp. It trades about 0.18 of its potential returns per unit of risk. Bip Investment Corp is currently generating about -0.06 per unit of risk. If you would invest 2,699 in UnitedHealth Group CDR on September 1, 2024 and sell it today you would earn a total of 202.00 from holding UnitedHealth Group CDR or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group CDR vs. Bip Investment Corp
Performance |
| Timeline |
| UnitedHealth Group CDR |
| Bip Investment Corp |
UnitedHealth Group and Bip Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Bip Investment
The main advantage of trading using opposite UnitedHealth Group and Bip Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Bip Investment 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 Bip Investment will offset losses from the drop in Bip Investment's long position.| UnitedHealth Group vs. Exco Technologies Limited | UnitedHealth Group vs. Quorum Information Technologies | UnitedHealth Group vs. Rogers Communications | UnitedHealth Group vs. Ocumetics Technology Corp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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