Correlation Between Apogee Enterprises and United Rentals
Can any of the company-specific risk be diversified away by investing in both Apogee Enterprises 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 Apogee Enterprises and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apogee Enterprises and United Rentals, you can compare the effects of market volatilities on Apogee Enterprises 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 Apogee Enterprises with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apogee Enterprises and United Rentals.
Diversification Opportunities for Apogee Enterprises and United Rentals
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Apogee and United is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Apogee Enterprises 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 Apogee Enterprises 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 Apogee Enterprises i.e., Apogee Enterprises and United Rentals go up and down completely randomly.
Pair Corralation between Apogee Enterprises and United Rentals
Given the investment horizon of 90 days Apogee Enterprises is expected to generate 1.26 times more return on investment than United Rentals. However, Apogee Enterprises is 1.26 times more volatile than United Rentals. It trades about 0.08 of its potential returns per unit of risk. United Rentals is currently generating about 0.09 per unit of risk. If you would invest 6,393 in Apogee Enterprises on September 3, 2024 and sell it today you would earn a total of 2,028 from holding Apogee Enterprises or generate 31.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apogee Enterprises vs. United Rentals
Performance |
| Timeline |
| Apogee Enterprises |
| United Rentals |
Apogee Enterprises and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apogee Enterprises and United Rentals
The main advantage of trading using opposite Apogee Enterprises and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apogee Enterprises 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.| Apogee Enterprises vs. Quanex Building Products | Apogee Enterprises vs. Janus International Group | Apogee Enterprises vs. Interface | Apogee Enterprises vs. Azek Company |
| United Rentals vs. Alta Equipment Group | United Rentals vs. McGrath RentCorp | United Rentals vs. Herc Holdings | United Rentals vs. HE Equipment Services |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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