Correlation Between UnitedHealth Group and United Rentals
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and United Rentals 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 United Rentals 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 United Rentals, you can compare the effects of market volatilities on UnitedHealth Group and United Rentals 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 United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and United Rentals.
Diversification Opportunities for UnitedHealth Group and United Rentals
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UnitedHealth and United is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals 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 United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and United Rentals go up and down completely randomly.
Pair Corralation between UnitedHealth Group and United Rentals
Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to under-perform the United Rentals. In addition to that, UnitedHealth Group is 1.49 times more volatile than United Rentals. It trades about -0.12 of its total potential returns per unit of risk. United Rentals is currently generating about -0.1 per unit of volatility. If you would invest 17,550 in United Rentals on September 15, 2024 and sell it today you would lose (709.00) from holding United Rentals or give up 4.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UnitedHealth Group Incorporate vs. United Rentals
Performance |
| Timeline |
| UnitedHealth Group |
| United Rentals |
UnitedHealth Group and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and United Rentals
The main advantage of trading using opposite UnitedHealth Group and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, United Rentals 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 United Rentals will offset losses from the drop in United Rentals' long position.| UnitedHealth Group vs. Odontoprev SA | UnitedHealth Group vs. Qualicorp Consultoria e | UnitedHealth Group vs. Fundo Investimento Imobiliario | UnitedHealth Group vs. LESTE FDO INV |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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