Correlation Between UnitedHealth Group and Metalurgica Gerdau
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Metalurgica Gerdau 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 Metalurgica Gerdau 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 Metalurgica Gerdau SA, you can compare the effects of market volatilities on UnitedHealth Group and Metalurgica Gerdau 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 Metalurgica Gerdau. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Metalurgica Gerdau.
Diversification Opportunities for UnitedHealth Group and Metalurgica Gerdau
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between UnitedHealth and Metalurgica is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Metalurgica Gerdau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalurgica Gerdau 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 Metalurgica Gerdau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalurgica Gerdau has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Metalurgica Gerdau go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Metalurgica Gerdau
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to generate 0.87 times more return on investment than Metalurgica Gerdau. However, UnitedHealth Group Incorporated is 1.15 times less risky than Metalurgica Gerdau. It trades about 0.03 of its potential returns per unit of risk. Metalurgica Gerdau SA is currently generating about 0.02 per unit of risk. If you would invest 3,936 in UnitedHealth Group Incorporated on August 26, 2024 and sell it today you would earn a total of 976.00 from holding UnitedHealth Group Incorporated or generate 24.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. Metalurgica Gerdau SA
Performance |
| Timeline |
| UnitedHealth Group |
| Metalurgica Gerdau |
UnitedHealth Group and Metalurgica Gerdau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Metalurgica Gerdau
The main advantage of trading using opposite UnitedHealth Group and Metalurgica Gerdau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Metalurgica Gerdau 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 Metalurgica Gerdau will offset losses from the drop in Metalurgica Gerdau's long position.| UnitedHealth Group vs. Qualicorp Consultoria e | UnitedHealth Group vs. Fras le SA | UnitedHealth Group vs. Western Digital | UnitedHealth Group vs. Clave Indices De |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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