Correlation Between UnitedHealth Group and Banco Bilbao

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

Diversification Opportunities for UnitedHealth Group and Banco Bilbao

-0.37

Correlation Coefficient

UnitedHealth Group  Banco Bilbao

Very good diversification

The 3 months correlation between UnitedHealth and Banco is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Banco Bilbao Vizcaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Bilbao Vizcaya 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 Banco Bilbao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Bilbao Vizcaya has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Banco Bilbao go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Banco Bilbao

Assuming the 90 days trading horizon UnitedHealth Group Incorporated is expected to under-perform the Banco Bilbao. In addition to that, UnitedHealth Group is 1.05 times more volatile than Banco Bilbao Vizcaya. It trades about -0.06 of its total potential returns per unit of risk. Banco Bilbao Vizcaya is currently generating about -0.05 per unit of volatility. If you would invest  21,288  in Banco Bilbao Vizcaya on September 27, 2024 and sell it today you would lose (1,788) from holding Banco Bilbao Vizcaya or give up 8.4% of portfolio value over 90 days.

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

UnitedHealth Group Incorporate  vs.  Banco Bilbao Vizcaya

UnitedHealth Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UnitedHealth Group Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Banco Bilbao Vizcaya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Bilbao Vizcaya has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with UnitedHealth Group and Banco Bilbao

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

The idea behind UnitedHealth Group Incorporated and Banco Bilbao Vizcaya 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.