Correlation Between UnitedHealth Group and Brookdale Senior
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Brookdale Senior 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 Brookdale Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UnitedHealth Group Incorporated and Brookdale Senior Living, you can compare the effects of market volatilities on UnitedHealth Group and Brookdale Senior 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 Brookdale Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Brookdale Senior.
Diversification Opportunities for UnitedHealth Group and Brookdale Senior
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UnitedHealth and Brookdale is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Brookdale Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookdale Senior Living 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 Incorporated are associated (or correlated) with Brookdale Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookdale Senior Living has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Brookdale Senior go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Brookdale Senior
Considering the 90-day investment horizon UnitedHealth Group Incorporated is expected to generate 0.55 times more return on investment than Brookdale Senior. However, UnitedHealth Group Incorporated is 1.8 times less risky than Brookdale Senior. It trades about 0.21 of its potential returns per unit of risk. Brookdale Senior Living is currently generating about -0.11 per unit of risk. If you would invest 55,777 in UnitedHealth Group Incorporated on September 5, 2024 and sell it today you would earn a total of 4,746 from holding UnitedHealth Group Incorporated or generate 8.51% 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 Incorporate vs. Brookdale Senior Living
Performance |
| Timeline |
| UnitedHealth Group |
| Brookdale Senior Living |
UnitedHealth Group and Brookdale Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Brookdale Senior
The main advantage of trading using opposite UnitedHealth Group and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Brookdale Senior 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 Brookdale Senior will offset losses from the drop in Brookdale Senior's long position.| UnitedHealth Group vs. Cigna Corp | UnitedHealth Group vs. Humana Inc | UnitedHealth Group vs. Elevance Health | UnitedHealth Group vs. Centene Corp |
| Brookdale Senior vs. Humana Inc | Brookdale Senior vs. Elevance Health | Brookdale Senior vs. UnitedHealth Group Incorporated | Brookdale Senior vs. Molina Healthcare |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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