Correlation Between Aarons and United Rentals
Can any of the company-specific risk be diversified away by investing in both Aarons 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 Aarons and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Aarons and United Rentals, you can compare the effects of market volatilities on Aarons 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 Aarons with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aarons and United Rentals.
Diversification Opportunities for Aarons and United Rentals
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aarons and United is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Aarons and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Aarons 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 The Aarons 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 Aarons i.e., Aarons and United Rentals go up and down completely randomly.
Pair Corralation between Aarons and United Rentals
Considering the 90-day investment horizon Aarons is expected to generate 18.77 times less return on investment than United Rentals. In addition to that, Aarons is 1.65 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 0.12 per unit of volatility. If you would invest 35,214 in United Rentals on August 27, 2024 and sell it today you would earn a total of 49,718 from holding United Rentals or generate 141.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.35% |
| Values | Daily Returns |
The Aarons vs. United Rentals
Performance |
| Timeline |
| Aarons |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| United Rentals |
Aarons and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aarons and United Rentals
The main advantage of trading using opposite Aarons and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aarons 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.| Aarons vs. Custom Truck One | Aarons vs. PROG Holdings | Aarons vs. McGrath RentCorp | Aarons vs. HE Equipment Services |
| United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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