Correlation Between Agilent Technologies and UnitedHealth Group

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

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

Diversification Opportunities for Agilent Technologies and UnitedHealth Group

-0.15

Correlation Coefficient

Agilent Technologies  UnitedHealth Group

Good diversification

The 3 months correlation between Agilent and UnitedHealth is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Agilent Technologies and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Agilent Technologies 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 Agilent Technologies 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 Agilent Technologies i.e., Agilent Technologies and UnitedHealth Group go up and down completely randomly.

Pair Corralation between Agilent Technologies and UnitedHealth Group

Assuming the 90 days trading horizon Agilent Technologies is expected to generate 0.62 times more return on investment than UnitedHealth Group. However, Agilent Technologies is 1.62 times less risky than UnitedHealth Group. It trades about 0.07 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.02 per unit of risk. If you would invest  38,724  in Agilent Technologies on September 25, 2024 and sell it today you would earn a total of  2,528  from holding Agilent Technologies or generate 6.53% return on investment over 90 days.

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

Agilent Technologies  vs.  UnitedHealth Group Incorporate

Agilent Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Agilent Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Agilent Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

UnitedHealth Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UnitedHealth Group Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, UnitedHealth Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Agilent Technologies and UnitedHealth Group

The main advantage of trading using opposite Agilent Technologies and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agilent Technologies 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 Agilent Technologies and UnitedHealth Group Incorporated 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.