Correlation Between UnitedHealth Group and CoStar
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and CoStar 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 CoStar 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 CoStar Group, you can compare the effects of market volatilities on UnitedHealth Group and CoStar 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 CoStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and CoStar.
Diversification Opportunities for UnitedHealth Group and CoStar
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UnitedHealth and CoStar is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group 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 CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and CoStar go up and down completely randomly.
Pair Corralation between UnitedHealth Group and CoStar
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to under-perform the CoStar. But the stock apears to be less risky and, when comparing its historical volatility, UnitedHealth Group Incorporated is 1.11 times less risky than CoStar. The stock trades about -0.04 of its potential returns per unit of risk. The CoStar Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 429.00 in CoStar Group on September 13, 2024 and sell it today you would earn a total of 33.00 from holding CoStar Group or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.62% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. CoStar Group
Performance |
| Timeline |
| UnitedHealth Group |
| CoStar Group |
UnitedHealth Group and CoStar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and CoStar
The main advantage of trading using opposite UnitedHealth Group and CoStar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, CoStar 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 CoStar will offset losses from the drop in CoStar's long position.| UnitedHealth Group vs. United Airlines Holdings | UnitedHealth Group vs. Multilaser Industrial SA | UnitedHealth Group vs. Southwest Airlines Co | UnitedHealth Group vs. Autohome |
| CoStar vs. Costco Wholesale | CoStar vs. UnitedHealth Group Incorporated | CoStar vs. Ross Stores | CoStar vs. NXP Semiconductors NV |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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