Correlation Between Tyson Foods and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Tyson Foods 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 Tyson Foods and UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tyson Foods and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Tyson Foods 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 Tyson Foods with a short position of UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tyson Foods and UnitedHealth Group.
Diversification Opportunities for Tyson Foods and UnitedHealth Group
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tyson and UnitedHealth is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Tyson Foods and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and Tyson Foods 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 Tyson Foods 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 Tyson Foods i.e., Tyson Foods and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Tyson Foods and UnitedHealth Group
Assuming the 90 days trading horizon Tyson Foods is expected to generate 1.35 times less return on investment than UnitedHealth Group. In addition to that, Tyson Foods is 1.48 times more volatile than UnitedHealth Group Incorporated. It trades about 0.02 of its total potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.03 per unit of volatility. If you would invest 3,646 in UnitedHealth Group Incorporated on September 26, 2024 and sell it today you would earn a total of 858.00 from holding UnitedHealth Group Incorporated or generate 23.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 75.0% |
Values | Daily Returns |
Tyson Foods vs. UnitedHealth Group Incorporate
Performance |
Timeline |
Tyson Foods |
UnitedHealth Group |
Tyson Foods and UnitedHealth Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tyson Foods and UnitedHealth Group
The main advantage of trading using opposite Tyson Foods and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tyson Foods 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.Tyson Foods vs. SLC Agrcola SA | Tyson Foods vs. Minerva SA | Tyson Foods vs. BrasilAgro Companhia | Tyson Foods vs. Minupar Participaes SA |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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