Correlation Between GBS Software and UNITED RENTALS
Can any of the company-specific risk be diversified away by investing in both GBS Software 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 GBS Software and UNITED RENTALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GBS Software AG and UNITED RENTALS, you can compare the effects of market volatilities on GBS Software 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 GBS Software with a short position of UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GBS Software and UNITED RENTALS.
Diversification Opportunities for GBS Software and UNITED RENTALS
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GBS and UNITED is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding GBS Software AG and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS and GBS Software 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 GBS Software AG 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 GBS Software i.e., GBS Software and UNITED RENTALS go up and down completely randomly.
Pair Corralation between GBS Software and UNITED RENTALS
Assuming the 90 days trading horizon GBS Software AG is expected to generate 1.18 times more return on investment than UNITED RENTALS. However, GBS Software is 1.18 times more volatile than UNITED RENTALS. It trades about 0.19 of its potential returns per unit of risk. UNITED RENTALS is currently generating about -0.14 per unit of risk. If you would invest 260.00 in GBS Software AG on October 30, 2024 and sell it today you would earn a total of 42.00 from holding GBS Software AG or generate 16.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GBS Software AG vs. UNITED RENTALS
Performance |
| Timeline |
| GBS Software AG |
| UNITED RENTALS |
GBS Software and UNITED RENTALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GBS Software and UNITED RENTALS
The main advantage of trading using opposite GBS Software and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GBS Software 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.| GBS Software vs. EVS Broadcast Equipment | GBS Software vs. Elmos Semiconductor SE | GBS Software vs. Nordic Semiconductor ASA | GBS Software vs. Transport International Holdings |
| UNITED RENTALS vs. SIEM OFFSHORE NEW | UNITED RENTALS vs. Taylor Morrison Home | UNITED RENTALS vs. Erste Group Bank | UNITED RENTALS vs. Ameriprise Financial |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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