Correlation Between UnitedHealth Group and Willow Biosciences
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Willow Biosciences 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 Willow Biosciences 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 Willow Biosciences, you can compare the effects of market volatilities on UnitedHealth Group and Willow Biosciences 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 Willow Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Willow Biosciences.
Diversification Opportunities for UnitedHealth Group and Willow Biosciences
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UnitedHealth and Willow is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group CDR and Willow Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willow Biosciences 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 Willow Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willow Biosciences has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Willow Biosciences go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Willow Biosciences
Assuming the 90 days trading horizon UnitedHealth Group CDR is expected to generate 0.15 times more return on investment than Willow Biosciences. However, UnitedHealth Group CDR is 6.49 times less risky than Willow Biosciences. It trades about 0.1 of its potential returns per unit of risk. Willow Biosciences is currently generating about -0.04 per unit of risk. If you would invest 2,415 in UnitedHealth Group CDR on October 24, 2024 and sell it today you would earn a total of 81.00 from holding UnitedHealth Group CDR or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
UnitedHealth Group CDR vs. Willow Biosciences
Performance |
| Timeline |
| UnitedHealth Group CDR |
| Willow Biosciences |
UnitedHealth Group and Willow Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Willow Biosciences
The main advantage of trading using opposite UnitedHealth Group and Willow Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Willow Biosciences 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 Willow Biosciences will offset losses from the drop in Willow Biosciences' long position.| UnitedHealth Group vs. North American Construction | UnitedHealth Group vs. CNJ Capital Investments | UnitedHealth Group vs. Leading Edge Materials | UnitedHealth Group vs. Element Fleet Management |
| Willow Biosciences vs. Medipharm Labs Corp | Willow Biosciences vs. Cardiol Therapeutics Class | Willow Biosciences vs. StageZero Life Sciences |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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