Correlation Between Guru Organic and UnitedHealth Group

Can any of the company-specific risk be diversified away by investing in both Guru Organic 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 Guru Organic and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guru Organic Energy and UnitedHealth Group CDR, you can compare the effects of market volatilities on Guru Organic 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 Guru Organic with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guru Organic and UnitedHealth Group.

Diversification Opportunities for Guru Organic and UnitedHealth Group

-0.76

Correlation Coefficient

Guru Organic  UnitedHealth Group

Pay attention - limited upside

The 3 months correlation between Guru and UnitedHealth is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Guru Organic Energy and UnitedHealth Group CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group CDR and Guru Organic 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 Guru Organic Energy 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 CDR has no effect on the direction of Guru Organic i.e., Guru Organic and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Guru Organic and UnitedHealth Group

Assuming the 90 days trading horizon Guru Organic Energy is expected to under-perform the UnitedHealth Group. In addition to that, Guru Organic is 1.64 times more volatile than UnitedHealth Group CDR. It trades about -0.17 of its total potential returns per unit of risk. UnitedHealth Group CDR is currently generating about 0.02 per unit of volatility. If you would invest  2,763  in UnitedHealth Group CDR on July 1, 2024 and sell it today you would earn a total of  22.00  from holding UnitedHealth Group CDR or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Guru Organic Energy  vs.  UnitedHealth Group CDR

Guru Organic Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guru Organic Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in October 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

UnitedHealth Group CDR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UnitedHealth Group CDR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, UnitedHealth Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Guru Organic and UnitedHealth Group

The main advantage of trading using opposite Guru Organic and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guru Organic 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.

The idea behind Guru Organic Energy and UnitedHealth Group CDR 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.