Correlation Between McGrath RentCorp and Ryder System
Can any of the company-specific risk be diversified away by investing in both McGrath RentCorp and Ryder System 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 McGrath RentCorp and Ryder System into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McGrath RentCorp and Ryder System, you can compare the effects of market volatilities on McGrath RentCorp and Ryder System 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 McGrath RentCorp with a short position of Ryder System. Check out your portfolio center. Please also check ongoing floating volatility patterns of McGrath RentCorp and Ryder System.
Diversification Opportunities for McGrath RentCorp and Ryder System
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between McGrath and Ryder is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding McGrath RentCorp and Ryder System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryder System and McGrath RentCorp 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 McGrath RentCorp are associated (or correlated) with Ryder System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryder System has no effect on the direction of McGrath RentCorp i.e., McGrath RentCorp and Ryder System go up and down completely randomly.
Pair Corralation between McGrath RentCorp and Ryder System
Given the investment horizon of 90 days McGrath RentCorp is expected to generate 2.95 times less return on investment than Ryder System. In addition to that, McGrath RentCorp is 1.03 times more volatile than Ryder System. It trades about 0.05 of its total potential returns per unit of risk. Ryder System is currently generating about 0.14 per unit of volatility. If you would invest 11,933 in Ryder System on August 24, 2024 and sell it today you would earn a total of 4,188 from holding Ryder System or generate 35.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
McGrath RentCorp vs. Ryder System
Performance |
| Timeline |
| McGrath RentCorp |
| Ryder System |
McGrath RentCorp and Ryder System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McGrath RentCorp and Ryder System
The main advantage of trading using opposite McGrath RentCorp and Ryder System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McGrath RentCorp position performs unexpectedly, Ryder System 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 Ryder System will offset losses from the drop in Ryder System's long position.| McGrath RentCorp vs. Alta Equipment Group | McGrath RentCorp vs. GATX Corporation | McGrath RentCorp vs. Mega Matrix Corp | McGrath RentCorp vs. FTAI Aviation Ltd |
| Ryder System vs. AerCap Holdings NV | Ryder System vs. Alta Equipment Group | Ryder System vs. PROG Holdings | Ryder System vs. GATX Corporation |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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