Correlation Between UnitedHealth Group and Canaf Investments
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Canaf Investments 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 Canaf Investments 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 Canaf Investments, you can compare the effects of market volatilities on UnitedHealth Group and Canaf Investments 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 Canaf Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Canaf Investments.
Diversification Opportunities for UnitedHealth Group and Canaf Investments
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between UnitedHealth and Canaf is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Canaf Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaf Investments 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 Canaf Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaf Investments has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Canaf Investments go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Canaf Investments
Assuming the 90 days trading horizon UnitedHealth Group CDR is expected to under-perform the Canaf Investments. But the stock apears to be less risky and, when comparing its historical volatility, UnitedHealth Group CDR is 1.28 times less risky than Canaf Investments. The stock trades about -0.19 of its potential returns per unit of risk. The Canaf Investments is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Canaf Investments on October 9, 2024 and sell it today you would earn a total of 2.00 from holding Canaf Investments or generate 6.67% 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. Canaf Investments
Performance |
| Timeline |
| UnitedHealth Group CDR |
| Canaf Investments |
UnitedHealth Group and Canaf Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Canaf Investments
The main advantage of trading using opposite UnitedHealth Group and Canaf Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Canaf Investments 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 Canaf Investments will offset losses from the drop in Canaf Investments' long position.| UnitedHealth Group vs. Enduro Metals Corp | UnitedHealth Group vs. Precious Metals And | UnitedHealth Group vs. Arbor Metals Corp | UnitedHealth Group vs. Ramp Metals |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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