Correlation Between UnitedHealth Group and CVS Health
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and CVS Health 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 CVS Health 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 CVS Health Corp, you can compare the effects of market volatilities on UnitedHealth Group and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and CVS Health.
Diversification Opportunities for UnitedHealth Group and CVS Health
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UnitedHealth and CVS is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and CVS Health go up and down completely randomly.
Pair Corralation between UnitedHealth Group and CVS Health
Considering the 90-day investment horizon UnitedHealth Group Incorporated is expected to generate 1.2 times more return on investment than CVS Health. However, UnitedHealth Group is 1.2 times more volatile than CVS Health Corp. It trades about 0.03 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.32 per unit of risk. If you would invest 48,588 in UnitedHealth Group Incorporated on January 24, 2024 and sell it today you would earn a total of 535.00 from holding UnitedHealth Group Incorporated or generate 1.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
UnitedHealth Group Incorporate vs. CVS Health Corp
Performance |
Timeline |
UnitedHealth Group |
CVS Health Corp |
UnitedHealth Group and CVS Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UnitedHealth Group and CVS Health
The main advantage of trading using opposite UnitedHealth Group and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.UnitedHealth Group vs. Cigna Corp | UnitedHealth Group vs. Humana Inc | UnitedHealth Group vs. Elevance Health | UnitedHealth Group vs. Centene Corp |
CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |