Correlation Between Fortrea Holdings and United Rentals
Can any of the company-specific risk be diversified away by investing in both Fortrea Holdings 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 Fortrea Holdings and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortrea Holdings and United Rentals, you can compare the effects of market volatilities on Fortrea Holdings 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 Fortrea Holdings with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortrea Holdings and United Rentals.
Diversification Opportunities for Fortrea Holdings and United Rentals
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fortrea and United is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fortrea Holdings and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Fortrea Holdings 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 Fortrea Holdings 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 Fortrea Holdings i.e., Fortrea Holdings and United Rentals go up and down completely randomly.
Pair Corralation between Fortrea Holdings and United Rentals
Given the investment horizon of 90 days Fortrea Holdings is expected to under-perform the United Rentals. In addition to that, Fortrea Holdings is 1.52 times more volatile than United Rentals. It trades about -0.01 of its total potential returns per unit of risk. United Rentals is currently generating about 0.09 per unit of volatility. If you would invest 34,927 in United Rentals on September 5, 2024 and sell it today you would earn a total of 51,975 from holding United Rentals or generate 148.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 74.75% |
| Values | Daily Returns |
Fortrea Holdings vs. United Rentals
Performance |
| Timeline |
| Fortrea Holdings |
| United Rentals |
Fortrea Holdings and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortrea Holdings and United Rentals
The main advantage of trading using opposite Fortrea Holdings and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortrea Holdings 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.| Fortrea Holdings vs. United Rentals | Fortrea Holdings vs. Global Ship Lease | Fortrea Holdings vs. Triton International Limited | Fortrea Holdings vs. Casio Computer Co |
| United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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