Correlation Between UnitedHealth Group and MAG Silver
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and MAG Silver 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 MAG Silver 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 MAG Silver Corp, you can compare the effects of market volatilities on UnitedHealth Group and MAG Silver 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 MAG Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and MAG Silver.
Diversification Opportunities for UnitedHealth Group and MAG Silver
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UnitedHealth and MAG is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and MAG Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAG Silver 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 MAG Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAG Silver Corp has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and MAG Silver go up and down completely randomly.
Pair Corralation between UnitedHealth Group and MAG Silver
Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 15.52 times less return on investment than MAG Silver. But when comparing it to its historical volatility, UnitedHealth Group CDR is 1.69 times less risky than MAG Silver. It trades about 0.02 of its potential returns per unit of risk. MAG Silver Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,653 in MAG Silver Corp on August 31, 2024 and sell it today you would earn a total of 507.00 from holding MAG Silver Corp or generate 30.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group CDR vs. MAG Silver Corp
Performance |
| Timeline |
| UnitedHealth Group CDR |
| MAG Silver Corp |
UnitedHealth Group and MAG Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and MAG Silver
The main advantage of trading using opposite UnitedHealth Group and MAG Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, MAG Silver 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 MAG Silver will offset losses from the drop in MAG Silver's long position.| UnitedHealth Group vs. iShares Canadian HYBrid | UnitedHealth Group vs. Brompton European Dividend | UnitedHealth Group vs. Solar Alliance Energy | UnitedHealth Group vs. PHN Multi Style All Cap |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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