Correlation Between Aluminumof China and United Rentals
Can any of the company-specific risk be diversified away by investing in both Aluminumof China 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 Aluminumof China and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and United Rentals, you can compare the effects of market volatilities on Aluminumof China 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 Aluminumof China with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and United Rentals.
Diversification Opportunities for Aluminumof China and United Rentals
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aluminumof and United is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Aluminumof China 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 Aluminum of 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 Aluminumof China i.e., Aluminumof China and United Rentals go up and down completely randomly.
Pair Corralation between Aluminumof China and United Rentals
Assuming the 90 days horizon Aluminum of is expected to under-perform the United Rentals. In addition to that, Aluminumof China is 1.59 times more volatile than United Rentals. It trades about -0.08 of its total potential returns per unit of risk. United Rentals is currently generating about 0.05 per unit of volatility. If you would invest 75,010 in United Rentals on August 25, 2024 and sell it today you would earn a total of 2,270 from holding United Rentals or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. United Rentals
Performance |
| Timeline |
| Aluminumof China |
| United Rentals |
Aluminumof China and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and United Rentals
The main advantage of trading using opposite Aluminumof China and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China 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.| Aluminumof China vs. Charter Communications | Aluminumof China vs. SALESFORCE INC CDR | Aluminumof China vs. CODERE ONLINE LUX | Aluminumof China vs. PACIFIC ONLINE |
| United Rentals vs. WillScot Mobile Mini | United Rentals vs. Superior Plus Corp | United Rentals vs. NMI Holdings | United Rentals vs. Origin Agritech |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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