Correlation Between Westinghouse Air and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Westinghouse Air and UnitedHealth Group 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 Westinghouse Air and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westinghouse Air Brake and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Westinghouse Air and UnitedHealth Group 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 Westinghouse Air with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westinghouse Air and UnitedHealth Group.
Diversification Opportunities for Westinghouse Air and UnitedHealth Group
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westinghouse and UnitedHealth is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Westinghouse Air Brake and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Westinghouse Air 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 Westinghouse Air Brake are associated (or correlated) with UnitedHealth Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UnitedHealth Group has no effect on the direction of Westinghouse Air i.e., Westinghouse Air and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Westinghouse Air and UnitedHealth Group
Assuming the 90 days trading horizon Westinghouse Air Brake is expected to generate 0.7 times more return on investment than UnitedHealth Group. However, Westinghouse Air Brake is 1.43 times less risky than UnitedHealth Group. It trades about 0.18 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.06 per unit of risk. If you would invest 33,838 in Westinghouse Air Brake on November 3, 2024 and sell it today you would earn a total of 26,601 from holding Westinghouse Air Brake or generate 78.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Westinghouse Air Brake vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Westinghouse Air Brake |
| UnitedHealth Group |
Westinghouse Air and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westinghouse Air and UnitedHealth Group
The main advantage of trading using opposite Westinghouse Air and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westinghouse Air position performs unexpectedly, UnitedHealth Group 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 UnitedHealth Group will offset losses from the drop in UnitedHealth Group's long position.| Westinghouse Air vs. Take Two Interactive Software | Westinghouse Air vs. Burlington Stores, | Westinghouse Air vs. Medical Properties Trust, | Westinghouse Air vs. United Natural Foods, |
| UnitedHealth Group vs. Jefferies Financial Group | UnitedHealth Group vs. Nordon Indstrias Metalrgicas | UnitedHealth Group vs. Broadridge Financial Solutions, | UnitedHealth Group vs. Prudential Financial |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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