Correlation Between Capital One and United Rentals
Can any of the company-specific risk be diversified away by investing in both Capital One 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 Capital One and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital One Financial and United Rentals, you can compare the effects of market volatilities on Capital One 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 Capital One with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and United Rentals.
Diversification Opportunities for Capital One and United Rentals
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and United is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Capital One 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 Capital One 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 Capital One i.e., Capital One and United Rentals go up and down completely randomly.
Pair Corralation between Capital One and United Rentals
Assuming the 90 days trading horizon Capital One Financial is expected to generate 0.83 times more return on investment than United Rentals. However, Capital One Financial is 1.21 times less risky than United Rentals. It trades about 0.37 of its potential returns per unit of risk. United Rentals is currently generating about 0.14 per unit of risk. If you would invest 47,114 in Capital One Financial on September 1, 2024 and sell it today you would earn a total of 12,452 from holding Capital One Financial or generate 26.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. United Rentals
Performance |
| Timeline |
| Capital One Financial |
| United Rentals |
Capital One and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and United Rentals
The main advantage of trading using opposite Capital One and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One 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.| Capital One vs. Bemobi Mobile Tech | Capital One vs. Zoom Video Communications | Capital One vs. Palantir Technologies | Capital One vs. Dell Technologies |
| United Rentals vs. Localiza Rent a | United Rentals vs. Vamos Locao de | United Rentals vs. Movida Participaes 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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