Correlation Between MAHLE Metal and United Rentals
Can any of the company-specific risk be diversified away by investing in both MAHLE Metal 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 MAHLE Metal and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAHLE Metal Leve and United Rentals, you can compare the effects of market volatilities on MAHLE Metal 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 MAHLE Metal with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and United Rentals.
Diversification Opportunities for MAHLE Metal and United Rentals
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MAHLE and United is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and MAHLE Metal 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 MAHLE Metal Leve 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 MAHLE Metal i.e., MAHLE Metal and United Rentals go up and down completely randomly.
Pair Corralation between MAHLE Metal and United Rentals
Assuming the 90 days trading horizon MAHLE Metal is expected to generate 5.21 times less return on investment than United Rentals. In addition to that, MAHLE Metal is 1.05 times more volatile than United Rentals. It trades about 0.02 of its total potential returns per unit of risk. United Rentals is currently generating about 0.12 per unit of volatility. If you would invest 6,352 in United Rentals on August 29, 2024 and sell it today you would earn a total of 11,720 from holding United Rentals or generate 184.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
MAHLE Metal Leve vs. United Rentals
Performance |
| Timeline |
| MAHLE Metal Leve |
| United Rentals |
MAHLE Metal and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAHLE Metal and United Rentals
The main advantage of trading using opposite MAHLE Metal and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAHLE Metal 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.| MAHLE Metal vs. Baidu Inc | MAHLE Metal vs. Deutsche Bank Aktiengesellschaft | MAHLE Metal vs. HSBC Holdings plc | MAHLE Metal vs. The Bank of |
| United Rentals vs. Localiza Rent a | United Rentals vs. Movida Participaes SA | United Rentals vs. Fras le SA | United Rentals vs. Clave Indices De |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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