Correlation Between EXACT Sciences and UnitedHealth Group

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

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

Diversification Opportunities for EXACT Sciences and UnitedHealth Group

-0.52

Correlation Coefficient

EXACT Sciences  UnitedHealth Group

Excellent diversification

The 3 months correlation between EXACT and UnitedHealth is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding EXACT Sciences and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group and EXACT Sciences 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 EXACT Sciences 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 EXACT Sciences i.e., EXACT Sciences and UnitedHealth Group go up and down completely randomly.

Pair Corralation between EXACT Sciences and UnitedHealth Group

Given the investment horizon of 90 days EXACT Sciences is expected to generate 1.33 times more return on investment than UnitedHealth Group. However, EXACT Sciences is 1.33 times more volatile than UnitedHealth Group Incorporated. It trades about 0.03 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.01 per unit of risk. If you would invest  6,266  in EXACT Sciences on January 20, 2024 and sell it today you would earn a total of  82.00  from holding EXACT Sciences or generate 1.31% return on investment over 90 days.

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

EXACT Sciences  vs.  UnitedHealth Group Incorporate

EXACT Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EXACT Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, EXACT Sciences is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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. Despite fairly strong basic indicators, UnitedHealth Group is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with EXACT Sciences and UnitedHealth Group

The main advantage of trading using opposite EXACT Sciences and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EXACT Sciences 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 EXACT Sciences 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.

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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.