Correlation Between UnitedHealth Group and Brookfield Infrastructure
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Brookfield Infrastructure 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 Brookfield Infrastructure 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 Brookfield Infrastructure Partners, you can compare the effects of market volatilities on UnitedHealth Group and Brookfield Infrastructure 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 Brookfield Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Brookfield Infrastructure.
Diversification Opportunities for UnitedHealth Group and Brookfield Infrastructure
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UnitedHealth and Brookfield is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure 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 Brookfield Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Infrastructure has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Brookfield Infrastructure go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Brookfield Infrastructure
Assuming the 90 days trading horizon UnitedHealth Group CDR is expected to generate 2.39 times more return on investment than Brookfield Infrastructure. However, UnitedHealth Group is 2.39 times more volatile than Brookfield Infrastructure Partners. It trades about 0.11 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about 0.06 per unit of risk. If you would invest 2,372 in UnitedHealth Group CDR on September 1, 2024 and sell it today you would earn a total of 529.00 from holding UnitedHealth Group CDR or generate 22.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group CDR vs. Brookfield Infrastructure Part
Performance |
| Timeline |
| UnitedHealth Group CDR |
| Brookfield Infrastructure |
UnitedHealth Group and Brookfield Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Brookfield Infrastructure
The main advantage of trading using opposite UnitedHealth Group and Brookfield Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Brookfield Infrastructure 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 Brookfield Infrastructure will offset losses from the drop in Brookfield Infrastructure'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 |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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