Correlation Between Chiba Bank and United Rentals
Can any of the company-specific risk be diversified away by investing in both Chiba Bank 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 Chiba Bank and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiba Bank and United Rentals, you can compare the effects of market volatilities on Chiba Bank 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 Chiba Bank with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and United Rentals.
Diversification Opportunities for Chiba Bank and United Rentals
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chiba and United is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Chiba Bank 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 Chiba Bank 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 Chiba Bank i.e., Chiba Bank and United Rentals go up and down completely randomly.
Pair Corralation between Chiba Bank and United Rentals
Assuming the 90 days horizon Chiba Bank is expected to generate 1.08 times less return on investment than United Rentals. In addition to that, Chiba Bank is 1.29 times more volatile than United Rentals. It trades about 0.06 of its total potential returns per unit of risk. United Rentals is currently generating about 0.08 per unit of volatility. If you would invest 33,090 in United Rentals on September 3, 2024 and sell it today you would earn a total of 47,650 from holding United Rentals or generate 144.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chiba Bank vs. United Rentals
Performance |
| Timeline |
| Chiba Bank |
| United Rentals |
Chiba Bank and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chiba Bank and United Rentals
The main advantage of trading using opposite Chiba Bank and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank 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.| Chiba Bank vs. TOTAL GABON | Chiba Bank vs. Walgreens Boots Alliance | Chiba Bank vs. Peak Resources Limited |
| United Rentals vs. Ashtead Group plc | United Rentals vs. WillScot Mobile Mini | United Rentals vs. Sixt SE |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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