Correlation Between Nomad Foods and UNITED RENTALS
Can any of the company-specific risk be diversified away by investing in both Nomad Foods 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 Nomad Foods and UNITED RENTALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomad Foods and UNITED RENTALS, you can compare the effects of market volatilities on Nomad Foods 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 Nomad Foods with a short position of UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and UNITED RENTALS.
Diversification Opportunities for Nomad Foods and UNITED RENTALS
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nomad and UNITED is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS and Nomad Foods 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 Nomad Foods 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 Nomad Foods i.e., Nomad Foods and UNITED RENTALS go up and down completely randomly.
Pair Corralation between Nomad Foods and UNITED RENTALS
Assuming the 90 days trading horizon Nomad Foods is expected to generate 1.25 times less return on investment than UNITED RENTALS. In addition to that, Nomad Foods is 1.1 times more volatile than UNITED RENTALS. It trades about 0.14 of its total potential returns per unit of risk. UNITED RENTALS is currently generating about 0.19 per unit of volatility. If you would invest 65,340 in UNITED RENTALS on November 8, 2024 and sell it today you would earn a total of 5,420 from holding UNITED RENTALS or generate 8.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomad Foods vs. UNITED RENTALS
Performance |
| Timeline |
| Nomad Foods |
| UNITED RENTALS |
Nomad Foods and UNITED RENTALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and UNITED RENTALS
The main advantage of trading using opposite Nomad Foods and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods 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's long position.| Nomad Foods vs. KENEDIX OFFICE INV | Nomad Foods vs. AWILCO DRILLING PLC | Nomad Foods vs. Focus Home Interactive | Nomad Foods vs. TOMBADOR IRON LTD |
| UNITED RENTALS vs. The Trade Desk | UNITED RENTALS vs. MEDCAW INVESTMENTS LS 01 | UNITED RENTALS vs. SEI INVESTMENTS | UNITED RENTALS vs. Gladstone Investment |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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