Correlation Between LESTE FDO and United Rentals
Can any of the company-specific risk be diversified away by investing in both LESTE FDO 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 LESTE FDO and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LESTE FDO INV and United Rentals, you can compare the effects of market volatilities on LESTE FDO 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 LESTE FDO with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of LESTE FDO and United Rentals.
Diversification Opportunities for LESTE FDO and United Rentals
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LESTE and United is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding LESTE FDO INV and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and LESTE FDO 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 LESTE FDO INV 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 LESTE FDO i.e., LESTE FDO and United Rentals go up and down completely randomly.
Pair Corralation between LESTE FDO and United Rentals
Assuming the 90 days trading horizon LESTE FDO INV is expected to under-perform the United Rentals. But the fund apears to be less risky and, when comparing its historical volatility, LESTE FDO INV is 1.46 times less risky than United Rentals. The fund trades about -0.17 of its potential returns per unit of risk. The United Rentals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 17,000 in United Rentals on September 13, 2024 and sell it today you would earn a total of 34.00 from holding United Rentals or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LESTE FDO INV vs. United Rentals
Performance |
| Timeline |
| LESTE FDO INV |
| United Rentals |
LESTE FDO and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LESTE FDO and United Rentals
The main advantage of trading using opposite LESTE FDO and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LESTE FDO 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.| LESTE FDO vs. Brio Multiestrategi Fundo | LESTE FDO vs. HEDGE SEED FUNDO | LESTE FDO vs. XP Hoteis Fundo | LESTE FDO vs. EXES FUNDO DE |
| United Rentals vs. Localiza Rent a | United Rentals vs. Movida Participaes SA | United Rentals vs. Fundo Investimento Imobiliario | United Rentals vs. LESTE FDO INV |
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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