Correlation Between MeVis Medical and United Rentals
Can any of the company-specific risk be diversified away by investing in both MeVis Medical 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 MeVis Medical and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MeVis Medical Solutions and United Rentals, you can compare the effects of market volatilities on MeVis Medical 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 MeVis Medical with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of MeVis Medical and United Rentals.
Diversification Opportunities for MeVis Medical and United Rentals
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MeVis and United is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding MeVis Medical Solutions and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and MeVis Medical 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 MeVis Medical Solutions 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 MeVis Medical i.e., MeVis Medical and United Rentals go up and down completely randomly.
Pair Corralation between MeVis Medical and United Rentals
Assuming the 90 days trading horizon MeVis Medical is expected to generate 7.1 times less return on investment than United Rentals. But when comparing it to its historical volatility, MeVis Medical Solutions is 4.6 times less risky than United Rentals. It trades about 0.11 of its potential returns per unit of risk. United Rentals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 72,235 in United Rentals on September 3, 2024 and sell it today you would earn a total of 8,505 from holding United Rentals or generate 11.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MeVis Medical Solutions vs. United Rentals
Performance |
| Timeline |
| MeVis Medical Solutions |
| United Rentals |
MeVis Medical and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MeVis Medical and United Rentals
The main advantage of trading using opposite MeVis Medical and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MeVis Medical 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.| MeVis Medical vs. Apple Inc | MeVis Medical vs. Apple Inc | MeVis Medical vs. Apple Inc | MeVis Medical vs. Apple Inc |
| United Rentals vs. Ashtead Group plc | United Rentals vs. WillScot Mobile Mini | United Rentals vs. Sixt SE |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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