Correlation Between DXC Technology and United Rentals
Can any of the company-specific risk be diversified away by investing in both DXC Technology 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 DXC Technology and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DXC Technology Co and United Rentals, you can compare the effects of market volatilities on DXC Technology 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 DXC Technology with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of DXC Technology and United Rentals.
Diversification Opportunities for DXC Technology and United Rentals
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DXC and United is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and DXC Technology 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 DXC Technology Co 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 DXC Technology i.e., DXC Technology and United Rentals go up and down completely randomly.
Pair Corralation between DXC Technology and United Rentals
Assuming the 90 days trading horizon DXC Technology Co is expected to under-perform the United Rentals. In addition to that, DXC Technology is 1.07 times more volatile than United Rentals. It trades about 0.0 of its total potential returns per unit of risk. United Rentals is currently generating about 0.08 per unit of volatility. If you would invest 33,090 in United Rentals on September 3, 2024 and sell it today you would earn a total of 47,650 from holding United Rentals or generate 144.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DXC Technology Co vs. United Rentals
Performance |
| Timeline |
| DXC Technology |
| United Rentals |
DXC Technology and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DXC Technology and United Rentals
The main advantage of trading using opposite DXC Technology and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DXC Technology 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.| DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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