Correlation Between Gladstone Investment and United Rentals
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment 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 Gladstone Investment and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and United Rentals, you can compare the effects of market volatilities on Gladstone Investment 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 Gladstone Investment with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and United Rentals.
Diversification Opportunities for Gladstone Investment and United Rentals
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gladstone and United is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment i.e., Gladstone Investment and United Rentals go up and down completely randomly.
Pair Corralation between Gladstone Investment and United Rentals
Assuming the 90 days horizon Gladstone Investment is expected to under-perform the United Rentals. But the stock apears to be less risky and, when comparing its historical volatility, Gladstone Investment is 1.7 times less risky than United Rentals. The stock trades about -0.05 of its potential returns per unit of risk. The United Rentals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 75,010 in United Rentals on August 29, 2024 and sell it today you would earn a total of 6,790 from holding United Rentals or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. United Rentals
Performance |
| Timeline |
| Gladstone Investment |
| United Rentals |
Gladstone Investment and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and United Rentals
The main advantage of trading using opposite Gladstone Investment and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment 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.| Gladstone Investment vs. Lyxor 1 | Gladstone Investment vs. Xtrackers LevDAX | Gladstone Investment vs. Xtrackers ShortDAX |
| United Rentals vs. 24SEVENOFFICE GROUP AB | United Rentals vs. Corporate Office Properties | United Rentals vs. MTI WIRELESS EDGE | United Rentals vs. CITY OFFICE REIT |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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