Correlation Between Ashtead Group and United Rentals
Can any of the company-specific risk be diversified away by investing in both Ashtead Group and United Rentals 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 Ashtead Group and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashtead Group plc and United Rentals, you can compare the effects of market volatilities on Ashtead Group and United Rentals 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 Ashtead Group with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Group and United Rentals.
Diversification Opportunities for Ashtead Group and United Rentals
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ashtead and United is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Group plc and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Ashtead 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 Ashtead Group plc are associated (or correlated) with United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of Ashtead Group i.e., Ashtead Group and United Rentals go up and down completely randomly.
Pair Corralation between Ashtead Group and United Rentals
Assuming the 90 days horizon Ashtead Group is expected to generate 1.15 times less return on investment than United Rentals. But when comparing it to its historical volatility, Ashtead Group plc is 1.67 times less risky than United Rentals. It trades about 0.18 of its potential returns per unit of risk. United Rentals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 66,427 in United Rentals on September 3, 2024 and sell it today you would earn a total of 14,313 from holding United Rentals or generate 21.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashtead Group plc vs. United Rentals
Performance |
| Timeline |
| Ashtead Group plc |
| United Rentals |
Ashtead Group and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Group and United Rentals
The main advantage of trading using opposite Ashtead Group and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Group position performs unexpectedly, United Rentals 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 United Rentals will offset losses from the drop in United Rentals' long position.| Ashtead Group vs. PENN NATL GAMING | Ashtead Group vs. Media and Games | Ashtead Group vs. CI GAMES SA | Ashtead Group vs. Hochschild Mining plc |
| United Rentals vs. Ashtead Group plc | United Rentals vs. WillScot Mobile Mini | United Rentals vs. Sixt SE |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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