Correlation Between UnitedHealth Group and Barclays PLC

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

Diversification Opportunities for UnitedHealth Group and Barclays PLC

0.61

Correlation Coefficient

UnitedHealth Group  Barclays PLC

Poor diversification

The 3 months correlation between UnitedHealth and Barclays is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Barclays PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC 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 Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Barclays PLC go up and down completely randomly.

Pair Corralation between UnitedHealth Group and Barclays PLC

Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 3.34 times less return on investment than Barclays PLC. In addition to that, UnitedHealth Group is 1.05 times more volatile than Barclays PLC. It trades about 0.05 of its total potential returns per unit of risk. Barclays PLC is currently generating about 0.17 per unit of volatility. If you would invest  22,010  in Barclays PLC on September 3, 2024 and sell it today you would earn a total of  4,990  from holding Barclays PLC or generate 22.67% return on investment over 90 days.

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

UnitedHealth Group Incorporate  vs.  Barclays PLC

UnitedHealth Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UnitedHealth Group Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical indicators, UnitedHealth Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Barclays PLC

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with UnitedHealth Group and Barclays PLC

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

The idea behind UnitedHealth Group Incorporated and Barclays PLC 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.