Correlation Between UnitedHealth Group and Power Financial
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Power Financial 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 Power Financial 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 Power Financial Corp, you can compare the effects of market volatilities on UnitedHealth Group and Power Financial 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 Power Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Power Financial.
Diversification Opportunities for UnitedHealth Group and Power Financial
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UnitedHealth and Power is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Power Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Financial 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 Power Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Financial Corp has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Power Financial go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Power Financial
Assuming the 90 days trading horizon UnitedHealth Group CDR is expected to generate 2.4 times more return on investment than Power Financial. However, UnitedHealth Group is 2.4 times more volatile than Power Financial Corp. It trades about 0.17 of its potential returns per unit of risk. Power Financial Corp is currently generating about -0.1 per unit of risk. If you would invest 2,701 in UnitedHealth Group CDR on August 29, 2024 and sell it today you would earn a total of 189.00 from holding UnitedHealth Group CDR or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group CDR vs. Power Financial Corp
Performance |
| Timeline |
| UnitedHealth Group CDR |
| Power Financial Corp |
UnitedHealth Group and Power Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Power Financial
The main advantage of trading using opposite UnitedHealth Group and Power Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Power Financial 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 Power Financial will offset losses from the drop in Power Financial's long position.| UnitedHealth Group vs. Boat Rocker Media | UnitedHealth Group vs. Profound Medical Corp | UnitedHealth Group vs. Bip Investment Corp | UnitedHealth Group vs. Canaf Investments |
| Power Financial vs. Manulife Financial Corp | Power Financial vs. Great West Lifeco | Power Financial vs. Great West Lifeco |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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