Correlation Between UnitedHealth Group and Basic Materials
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Basic Materials 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 Basic Materials 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 Basic Materials, you can compare the effects of market volatilities on UnitedHealth Group and Basic Materials 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 Basic Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Basic Materials.
Diversification Opportunities for UnitedHealth Group and Basic Materials
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between UnitedHealth and Basic is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Basic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Materials 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 Basic Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Materials has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Basic Materials go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Basic Materials
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to under-perform the Basic Materials. In addition to that, UnitedHealth Group is 3.04 times more volatile than Basic Materials. It trades about -0.16 of its total potential returns per unit of risk. Basic Materials is currently generating about 0.35 per unit of volatility. If you would invest 562,717 in Basic Materials on September 13, 2024 and sell it today you would earn a total of 39,480 from holding Basic Materials or generate 7.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. Basic Materials
Performance |
| Timeline |
UnitedHealth Group and Basic Materials Volatility Contrast
Predicted Return Density |
| Returns |
UnitedHealth Group Incorporated
Pair trading matchups for UnitedHealth Group
Basic Materials
Pair trading matchups for Basic Materials
Pair Trading with UnitedHealth Group and Basic Materials
The main advantage of trading using opposite UnitedHealth Group and Basic Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Basic Materials 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 Basic Materials will offset losses from the drop in Basic Materials' long position.| UnitedHealth Group vs. United Airlines Holdings | UnitedHealth Group vs. Multilaser Industrial SA | UnitedHealth Group vs. Southwest Airlines Co | UnitedHealth Group vs. Autohome |
| Basic Materials vs. Micron Technology | Basic Materials vs. T Mobile | Basic Materials vs. Beyond Meat | Basic Materials vs. Verizon Communications |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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