Correlation Between G III and UNITED RENTALS
Can any of the company-specific risk be diversified away by investing in both G III 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 G III and UNITED RENTALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G III Apparel Group and UNITED RENTALS, you can compare the effects of market volatilities on G III 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 G III with a short position of UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of G III and UNITED RENTALS.
Diversification Opportunities for G III and UNITED RENTALS
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GI4 and UNITED is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding G III Apparel Group and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS and G III 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 G III Apparel Group 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 G III i.e., G III and UNITED RENTALS go up and down completely randomly.
Pair Corralation between G III and UNITED RENTALS
Assuming the 90 days trading horizon G III is expected to generate 4.62 times less return on investment than UNITED RENTALS. But when comparing it to its historical volatility, G III Apparel Group is 1.3 times less risky than UNITED RENTALS. It trades about 0.06 of its potential returns per unit of risk. UNITED RENTALS is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 72,235 in UNITED RENTALS on September 3, 2024 and sell it today you would earn a total of 8,485 from holding UNITED RENTALS or generate 11.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G III Apparel Group vs. UNITED RENTALS
Performance |
| Timeline |
| G III Apparel |
| UNITED RENTALS |
G III and UNITED RENTALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G III and UNITED RENTALS
The main advantage of trading using opposite G III and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G III 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's long position.| G III vs. Westlake Chemical | G III vs. SK TELECOM TDADR | G III vs. Gamma Communications plc | G III vs. KINGBOARD CHEMICAL |
| UNITED RENTALS vs. Universal Display | UNITED RENTALS vs. PLAYTIKA HOLDING DL 01 | UNITED RENTALS vs. Ming Le Sports | UNITED RENTALS vs. JD SPORTS FASH |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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