Correlation Between KENNAMETAL INC and UNITED RENTALS
Can any of the company-specific risk be diversified away by investing in both KENNAMETAL INC 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 KENNAMETAL INC and UNITED RENTALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENNAMETAL INC and UNITED RENTALS, you can compare the effects of market volatilities on KENNAMETAL INC 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 KENNAMETAL INC with a short position of UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENNAMETAL INC and UNITED RENTALS.
Diversification Opportunities for KENNAMETAL INC and UNITED RENTALS
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KENNAMETAL and UNITED is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding KENNAMETAL INC and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS and KENNAMETAL INC 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 KENNAMETAL INC 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 KENNAMETAL INC i.e., KENNAMETAL INC and UNITED RENTALS go up and down completely randomly.
Pair Corralation between KENNAMETAL INC and UNITED RENTALS
Assuming the 90 days trading horizon KENNAMETAL INC is expected to generate 0.69 times more return on investment than UNITED RENTALS. However, KENNAMETAL INC is 1.45 times less risky than UNITED RENTALS. It trades about -0.08 of its potential returns per unit of risk. UNITED RENTALS is currently generating about -0.42 per unit of risk. If you would invest 2,081 in KENNAMETAL INC on December 9, 2024 and sell it today you would lose (61.00) from holding KENNAMETAL INC or give up 2.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENNAMETAL INC vs. UNITED RENTALS
Performance |
| Timeline |
| KENNAMETAL INC |
| UNITED RENTALS |
KENNAMETAL INC and UNITED RENTALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENNAMETAL INC and UNITED RENTALS
The main advantage of trading using opposite KENNAMETAL INC and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENNAMETAL INC 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.| KENNAMETAL INC vs. SCIENCE IN SPORT | KENNAMETAL INC vs. USWE SPORTS AB | KENNAMETAL INC vs. Transportadora de Gas | KENNAMETAL INC vs. Transport International Holdings |
| UNITED RENTALS vs. ONWARD MEDICAL BV | UNITED RENTALS vs. FARO Technologies | UNITED RENTALS vs. CREO MEDICAL GRP | UNITED RENTALS vs. GERATHERM MEDICAL |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |