Correlation Between UnitedHealth Group and Waste Management
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on UnitedHealth Group and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Waste Management.
Diversification Opportunities for UnitedHealth Group and Waste Management
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UnitedHealth and Waste is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Waste Management go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Waste Management
Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 1.41 times less return on investment than Waste Management. In addition to that, UnitedHealth Group is 1.3 times more volatile than Waste Management. It trades about 0.17 of its total potential returns per unit of risk. Waste Management is currently generating about 0.3 per unit of volatility. If you would invest 56,112 in Waste Management on August 30, 2024 and sell it today you would earn a total of 11,574 from holding Waste Management or generate 20.63% 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. Waste Management
Performance |
| Timeline |
| UnitedHealth Group |
| Waste Management |
UnitedHealth Group and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UnitedHealth Group and Waste Management
The main advantage of trading using opposite UnitedHealth Group and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| UnitedHealth Group vs. Odontoprev SA | UnitedHealth Group vs. Qualicorp Consultoria e | UnitedHealth Group vs. Energisa SA | UnitedHealth Group vs. BTG Pactual Logstica |
| Waste Management vs. Brpr Corporate Offices | Waste Management vs. Uber Technologies | Waste Management vs. Micron Technology | Waste Management vs. Technos SA |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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