Correlation Between UnitedHealth Group and Ulta Beauty
Can any of the company-specific risk be diversified away by investing in both UnitedHealth Group and Ulta Beauty 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 Ulta Beauty 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 Ulta Beauty, you can compare the effects of market volatilities on UnitedHealth Group and Ulta Beauty 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 Ulta Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of UnitedHealth Group and Ulta Beauty.
Diversification Opportunities for UnitedHealth Group and Ulta Beauty
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between UnitedHealth and Ulta is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding UnitedHealth Group Incorporate and Ulta Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ulta Beauty 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 Ulta Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ulta Beauty has no effect on the direction of UnitedHealth Group i.e., UnitedHealth Group and Ulta Beauty go up and down completely randomly.
Pair Corralation between UnitedHealth Group and Ulta Beauty
Assuming the 90 days trading horizon UnitedHealth Group is expected to generate 1.17 times less return on investment than Ulta Beauty. But when comparing it to its historical volatility, UnitedHealth Group Incorporated is 1.91 times less risky than Ulta Beauty. It trades about 0.03 of its potential returns per unit of risk. Ulta Beauty is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13,126 in Ulta Beauty on September 25, 2024 and sell it today you would earn a total of 274.00 from holding Ulta Beauty or generate 2.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.2% |
Values | Daily Returns |
UnitedHealth Group Incorporate vs. Ulta Beauty
Performance |
Timeline |
UnitedHealth Group |
Ulta Beauty |
UnitedHealth Group and Ulta Beauty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UnitedHealth Group and Ulta Beauty
The main advantage of trading using opposite UnitedHealth Group and Ulta Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UnitedHealth Group position performs unexpectedly, Ulta Beauty 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 Ulta Beauty will offset losses from the drop in Ulta Beauty's long position.UnitedHealth Group vs. Odontoprev SA | UnitedHealth Group vs. Qualicorp Consultoria e | UnitedHealth Group vs. Walmart | UnitedHealth Group vs. Morgan Stanley |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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