Correlation Between Transport International and United Rentals
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and United Rentals, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and United Rentals.
Diversification Opportunities for Transport International and United Rentals
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Transport and United is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and United Rentals go up and down completely randomly.
Pair Corralation between Transport International and United Rentals
Assuming the 90 days horizon Transport International is expected to generate 13.17 times less return on investment than United Rentals. In addition to that, Transport International is 1.45 times more volatile than United Rentals. It trades about 0.01 of its total potential returns per unit of risk. United Rentals is currently generating about 0.27 per unit of volatility. If you would invest 67,060 in United Rentals on November 7, 2024 and sell it today you would earn a total of 8,220 from holding United Rentals or generate 12.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport International Holdin vs. United Rentals
Performance |
| Timeline |
| Transport International |
| United Rentals |
Transport International and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and United Rentals
The main advantage of trading using opposite Transport International and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.| Transport International vs. CSX Corporation | Transport International vs. Norfolk Southern | Transport International vs. MTR Limited | Transport International vs. CRRC Limited |
| United Rentals vs. SIERRA METALS | United Rentals vs. CN DATANG C | United Rentals vs. CORNISH METALS INC | United Rentals vs. Transport International Holdings |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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