Correlation Between GMO Internet and United Rentals
Can any of the company-specific risk be diversified away by investing in both GMO Internet 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 GMO Internet and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and United Rentals, you can compare the effects of market volatilities on GMO Internet 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 GMO Internet with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and United Rentals.
Diversification Opportunities for GMO Internet and United Rentals
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between GMO and United is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and GMO Internet 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 GMO Internet 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 GMO Internet i.e., GMO Internet and United Rentals go up and down completely randomly.
Pair Corralation between GMO Internet and United Rentals
Assuming the 90 days horizon GMO Internet is expected to generate 2.66 times less return on investment than United Rentals. But when comparing it to its historical volatility, GMO Internet is 1.43 times less risky than United Rentals. It trades about 0.14 of its potential returns per unit of risk. United Rentals is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 67,200 in United Rentals on November 3, 2024 and sell it today you would earn a total of 8,080 from holding United Rentals or generate 12.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMO Internet vs. United Rentals
Performance |
| Timeline |
| GMO Internet |
| United Rentals |
GMO Internet and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and United Rentals
The main advantage of trading using opposite GMO Internet and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet 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.| GMO Internet vs. Hanison Construction Holdings | GMO Internet vs. Daito Trust Construction | GMO Internet vs. China Eastern Airlines | GMO Internet vs. China Railway Construction |
| United Rentals vs. OPKO HEALTH | United Rentals vs. Sims Metal Management | United Rentals vs. Tencent Music Entertainment | United Rentals vs. Molina Healthcare |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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