Correlation Between UnitedHealth Group and Therma Bright
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Therma Bright 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 Therma Bright 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 Therma Bright, you can compare the effects of market volatilities on UnitedHealth Group and Therma Bright 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 Therma Bright. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Therma Bright.
Diversification Opportunities for UnitedHealth Group and Therma Bright
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UnitedHealth and Therma is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Therma Bright in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Therma Bright 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 Therma Bright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Therma Bright has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Therma Bright go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Therma Bright
Assuming the 90 days trading horizon UnitedHealth Group CDR is expected to generate 0.13 times more return on investment than Therma Bright. However, UnitedHealth Group CDR is 7.46 times less risky than Therma Bright. It trades about -0.2 of its potential returns per unit of risk. Therma Bright is currently generating about -0.09 per unit of risk. If you would invest 2,972 in UnitedHealth Group CDR on September 12, 2024 and sell it today you would lose (274.00) from holding UnitedHealth Group CDR or give up 9.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group CDR vs. Therma Bright
Performance |
| Timeline |
| UnitedHealth Group CDR |
| Therma Bright |
UnitedHealth Group and Therma Bright Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Therma Bright
The main advantage of trading using opposite UnitedHealth Group and Therma Bright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Therma Bright 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 Therma Bright will offset losses from the drop in Therma Bright's long position.| UnitedHealth Group vs. Premium Income | UnitedHealth Group vs. E L Financial Corp | UnitedHealth Group vs. Fairfax Financial Holdings | UnitedHealth Group vs. Fairfax Fin Hld |
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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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