Correlation Between Custom Truck and United Rentals
Can any of the company-specific risk be diversified away by investing in both Custom Truck 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 Custom Truck and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Custom Truck One and United Rentals, you can compare the effects of market volatilities on Custom Truck 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 Custom Truck with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custom Truck and United Rentals.
Diversification Opportunities for Custom Truck and United Rentals
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Custom and United is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Custom Truck 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 Custom Truck One 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 Custom Truck i.e., Custom Truck and United Rentals go up and down completely randomly.
Pair Corralation between Custom Truck and United Rentals
Given the investment horizon of 90 days Custom Truck is expected to generate 17.13 times less return on investment than United Rentals. In addition to that, Custom Truck is 1.69 times more volatile than United Rentals. It trades about 0.0 of its total potential returns per unit of risk. United Rentals is currently generating about 0.06 per unit of volatility. If you would invest 68,872 in United Rentals on August 27, 2024 and sell it today you would earn a total of 16,060 from holding United Rentals or generate 23.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Custom Truck One vs. United Rentals
Performance |
| Timeline |
| Custom Truck One |
| United Rentals |
Custom Truck and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Custom Truck and United Rentals
The main advantage of trading using opposite Custom Truck and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Custom Truck 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.| Custom Truck vs. PROG Holdings | Custom Truck vs. McGrath RentCorp | Custom Truck vs. Mega Matrix Corp | Custom Truck vs. FTAI Aviation Ltd |
| United Rentals vs. PROG Holdings | United Rentals vs. McGrath RentCorp | United Rentals vs. Mega Matrix Corp | United Rentals vs. FTAI Aviation Ltd |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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