Correlation Between UnitedHealth Group and UFP Technologies
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and UFP Technologies 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 UFP Technologies 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 UFP Technologies, you can compare the effects of market volatilities on UnitedHealth Group and UFP Technologies 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 UFP Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and UFP Technologies.
Diversification Opportunities for UnitedHealth Group and UFP Technologies
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UnitedHealth and UFP is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and UFP Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UFP Technologies 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 UFP Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UFP Technologies has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and UFP Technologies go up and down completely randomly.
Pair Corralation between UnitedHealth Group and UFP Technologies
Considering the 90-day investment horizon UnitedHealth Group Incorporated is expected to under-perform the UFP Technologies. But the stock apears to be less risky and, when comparing its historical volatility, UnitedHealth Group Incorporated is 2.44 times less risky than UFP Technologies. The stock trades about 0.0 of its potential returns per unit of risk. The UFP Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 17,473 in UFP Technologies on February 7, 2024 and sell it today you would earn a total of 8,176 from holding UFP Technologies or generate 46.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
UnitedHealth Group Incorporate vs. UFP Technologies
Performance |
Timeline |
UnitedHealth Group |
UFP Technologies |
UnitedHealth Group and UFP Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UnitedHealth Group and UFP Technologies
The main advantage of trading using opposite UnitedHealth Group and UFP Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, UFP Technologies 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 UFP Technologies will offset losses from the drop in UFP Technologies' long position.UnitedHealth Group vs. Cigna Corp | UnitedHealth Group vs. Humana Inc | UnitedHealth Group vs. Elevance Health | UnitedHealth Group vs. Centene Corp |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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