Correlation Between Information Services and UNITED RENTALS
Can any of the company-specific risk be diversified away by investing in both Information Services 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 Information Services and UNITED RENTALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Services International Dentsu and UNITED RENTALS, you can compare the effects of market volatilities on Information Services 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 Information Services with a short position of UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and UNITED RENTALS.
Diversification Opportunities for Information Services and UNITED RENTALS
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Information and UNITED is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Internati and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS and Information Services 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 Information Services International Dentsu 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 Information Services i.e., Information Services and UNITED RENTALS go up and down completely randomly.
Pair Corralation between Information Services and UNITED RENTALS
Assuming the 90 days horizon Information Services is expected to generate 3.66 times less return on investment than UNITED RENTALS. But when comparing it to its historical volatility, Information Services International Dentsu is 1.13 times less risky than UNITED RENTALS. It trades about 0.02 of its potential returns per unit of risk. UNITED RENTALS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 40,736 in UNITED RENTALS on November 2, 2024 and sell it today you would earn a total of 31,584 from holding UNITED RENTALS or generate 77.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Information Services Internati vs. UNITED RENTALS
Performance |
| Timeline |
| Information Services |
| UNITED RENTALS |
Information Services and UNITED RENTALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Services and UNITED RENTALS
The main advantage of trading using opposite Information Services and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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.| Information Services vs. TAL Education Group | Information Services vs. CAREER EDUCATION | Information Services vs. Adtalem Global Education | Information Services vs. Perdoceo Education |
| UNITED RENTALS vs. Pure Storage | UNITED RENTALS vs. QBE Insurance Group | UNITED RENTALS vs. United Insurance Holdings | UNITED RENTALS vs. Extra Space Storage |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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