Correlation Between Duke Energy and United Rentals
Can any of the company-specific risk be diversified away by investing in both Duke Energy 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 Duke Energy and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duke Energy and United Rentals, you can compare the effects of market volatilities on Duke Energy 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 Duke Energy with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duke Energy and United Rentals.
Diversification Opportunities for Duke Energy and United Rentals
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Duke and United is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Duke Energy and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Duke Energy 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 Duke Energy 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 Duke Energy i.e., Duke Energy and United Rentals go up and down completely randomly.
Pair Corralation between Duke Energy and United Rentals
Assuming the 90 days trading horizon Duke Energy is expected to generate 1.51 times less return on investment than United Rentals. But when comparing it to its historical volatility, Duke Energy is 1.62 times less risky than United Rentals. It trades about 0.11 of its potential returns per unit of risk. United Rentals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7,732 in United Rentals on September 12, 2024 and sell it today you would earn a total of 9,548 from holding United Rentals or generate 123.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.2% |
| Values | Daily Returns |
Duke Energy vs. United Rentals
Performance |
| Timeline |
| Duke Energy |
| United Rentals |
Duke Energy and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duke Energy and United Rentals
The main advantage of trading using opposite Duke Energy and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duke Energy 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.| Duke Energy vs. United Rentals | Duke Energy vs. Bemobi Mobile Tech | Duke Energy vs. Autohome | Duke Energy vs. Take Two Interactive Software |
| United Rentals vs. Localiza Rent a | United Rentals vs. Movida Participaes SA | United Rentals vs. Fundo Investimento Imobiliario | United Rentals vs. LESTE FDO INV |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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