Correlation Between GFL ENVIRONM and United Rentals
Can any of the company-specific risk be diversified away by investing in both GFL ENVIRONM 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 GFL ENVIRONM and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFL ENVIRONM and United Rentals, you can compare the effects of market volatilities on GFL ENVIRONM 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 GFL ENVIRONM with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFL ENVIRONM and United Rentals.
Diversification Opportunities for GFL ENVIRONM and United Rentals
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GFL and United is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding GFL ENVIRONM and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and GFL ENVIRONM 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 GFL ENVIRONM 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 GFL ENVIRONM i.e., GFL ENVIRONM and United Rentals go up and down completely randomly.
Pair Corralation between GFL ENVIRONM and United Rentals
Assuming the 90 days horizon GFL ENVIRONM is expected to generate 0.61 times more return on investment than United Rentals. However, GFL ENVIRONM is 1.65 times less risky than United Rentals. It trades about 0.19 of its potential returns per unit of risk. United Rentals is currently generating about -0.07 per unit of risk. If you would invest 3,800 in GFL ENVIRONM on September 21, 2024 and sell it today you would earn a total of 560.00 from holding GFL ENVIRONM or generate 14.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFL ENVIRONM vs. United Rentals
Performance |
| Timeline |
| GFL ENVIRONM |
| United Rentals |
GFL ENVIRONM and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFL ENVIRONM and United Rentals
The main advantage of trading using opposite GFL ENVIRONM and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFL ENVIRONM 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.| GFL ENVIRONM vs. Veolia Environnement SA | GFL ENVIRONM vs. Superior Plus Corp | GFL ENVIRONM vs. SIVERS SEMICONDUCTORS AB | GFL ENVIRONM vs. NorAm Drilling AS |
| United Rentals vs. USWE SPORTS AB | United Rentals vs. Altair Engineering | United Rentals vs. Air Transport Services | United Rentals vs. LAir Liquide SA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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