Correlation Between UnitedHealth Group and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Electronic Arts 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 Electronic Arts 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 Electronic Arts, you can compare the effects of market volatilities on UnitedHealth Group and Electronic Arts 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 Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Electronic Arts.
Diversification Opportunities for UnitedHealth Group and Electronic Arts
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UnitedHealth and Electronic is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts 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 Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Electronic Arts go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Electronic Arts
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 2.74 times more return on investment than Electronic Arts. However, UnitedHealth Group is 2.74 times more volatile than Electronic Arts. It trades about -0.11 of its potential returns per unit of risk. Electronic Arts is currently generating about -0.63 per unit of risk. If you would invest 4,895 in UnitedHealth Group Incorporated on October 11, 2024 and sell it today you would lose (339.00) from holding UnitedHealth Group Incorporated or give up 6.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. Electronic Arts
Performance |
| Timeline |
| UnitedHealth Group |
| Electronic Arts |
UnitedHealth Group and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Electronic Arts
The main advantage of trading using opposite UnitedHealth Group and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.| UnitedHealth Group vs. NXP Semiconductors NV | UnitedHealth Group vs. Guidewire Software, | UnitedHealth Group vs. Hormel Foods | UnitedHealth Group vs. Deutsche Bank Aktiengesellschaft |
| Electronic Arts vs. UnitedHealth Group Incorporated | Electronic Arts vs. Broadcom | Electronic Arts vs. Metalrgica Riosulense SA | Electronic Arts vs. Delta Air Lines |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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