Correlation Between UnitedHealth Group and ServiceNow
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and ServiceNow 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 ServiceNow 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 ServiceNow, you can compare the effects of market volatilities on UnitedHealth Group and ServiceNow 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 ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and ServiceNow.
Diversification Opportunities for UnitedHealth Group and ServiceNow
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UnitedHealth and ServiceNow is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and ServiceNow go up and down completely randomly.
Pair Corralation between UnitedHealth Group and ServiceNow
Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 1.95 times less return on investment than ServiceNow. But when comparing it to its historical volatility, UnitedHealth Group Incorporated is 1.3 times less risky than ServiceNow. It trades about 0.08 of its potential returns per unit of risk. ServiceNow is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6,740 in ServiceNow on September 2, 2024 and sell it today you would earn a total of 6,060 from holding ServiceNow or generate 89.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. ServiceNow
Performance |
| Timeline |
| UnitedHealth Group |
| ServiceNow |
UnitedHealth Group and ServiceNow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and ServiceNow
The main advantage of trading using opposite UnitedHealth Group and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow's long position.| UnitedHealth Group vs. Odontoprev SA | UnitedHealth Group vs. Fras le SA | UnitedHealth Group vs. Western Digital | UnitedHealth Group vs. Energisa SA |
| ServiceNow vs. Apartment Investment and | ServiceNow vs. METISA Metalrgica Timboense | ServiceNow vs. Hospital Mater Dei | ServiceNow vs. Beyond Meat |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |