Correlation Between Truist Financial and United Rentals
Can any of the company-specific risk be diversified away by investing in both Truist Financial 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 Truist Financial and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and United Rentals, you can compare the effects of market volatilities on Truist Financial 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 Truist Financial with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and United Rentals.
Diversification Opportunities for Truist Financial and United Rentals
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Truist and United is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Truist Financial 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 Truist Financial 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 Truist Financial i.e., Truist Financial and United Rentals go up and down completely randomly.
Pair Corralation between Truist Financial and United Rentals
Assuming the 90 days trading horizon Truist Financial is expected to generate 0.38 times more return on investment than United Rentals. However, Truist Financial is 2.61 times less risky than United Rentals. It trades about 0.17 of its potential returns per unit of risk. United Rentals is currently generating about 0.06 per unit of risk. If you would invest 22,573 in Truist Financial on November 2, 2024 and sell it today you would earn a total of 5,359 from holding Truist Financial or generate 23.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truist Financial vs. United Rentals
Performance |
| Timeline |
| Truist Financial |
| United Rentals |
Truist Financial and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truist Financial and United Rentals
The main advantage of trading using opposite Truist Financial and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial 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.| Truist Financial vs. Clover Health Investments, | Truist Financial vs. Hospital Mater Dei | Truist Financial vs. Eastman Chemical | Truist Financial vs. United States Steel |
| United Rentals vs. Localiza Rent a | United Rentals vs. Movida Participaes SA | United Rentals vs. Datadog, |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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