Correlation Between UnitedHealth Group and Smith Nephew

Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Smith Nephew 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 Smith Nephew 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 Smith Nephew SNATS, you can compare the effects of market volatilities on UnitedHealth Group and Smith Nephew 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 Smith Nephew. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Smith Nephew.

Diversification Opportunities for UnitedHealth Group and Smith Nephew

-0.5

Correlation Coefficient

UnitedHealth Group  Smith Nephew

Very good diversification

The 3 months correlation between UnitedHealth and Smith is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Smith Nephew SNATS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Nephew SNATS 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 Smith Nephew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Nephew SNATS has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Smith Nephew go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Smith Nephew

Considering the 90-day investment horizon UnitedHealth Group Incorporated is expected to under-perform the Smith Nephew. In addition to that, UnitedHealth Group is 2.72 times more volatile than Smith Nephew SNATS. It trades about -0.2 of its total potential returns per unit of risk. Smith Nephew SNATS is currently generating about 0.1 per unit of volatility. If you would invest  2,844  in Smith Nephew SNATS on May 6, 2025 and sell it today you would earn a total of  239.00  from holding Smith Nephew SNATS or generate 8.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

UnitedHealth Group Incorporate  vs.  Smith Nephew SNATS

UnitedHealth Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days UnitedHealth Group Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Smith Nephew SNATS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smith Nephew SNATS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Smith Nephew may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with UnitedHealth Group and Smith Nephew

The main advantage of trading using opposite UnitedHealth Group and Smith Nephew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Smith Nephew 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 Smith Nephew will offset losses from the drop in Smith Nephew's long position.

The idea behind UnitedHealth Group Incorporated and Smith Nephew SNATS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.