Correlation Between McGrath RentCorp and Renishaw Plc
Can any of the company-specific risk be diversified away by investing in both McGrath RentCorp and Renishaw Plc 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 Renishaw Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McGrath RentCorp and Renishaw plc, you can compare the effects of market volatilities on McGrath RentCorp and Renishaw Plc 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 Renishaw Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of McGrath RentCorp and Renishaw Plc.
Diversification Opportunities for McGrath RentCorp and Renishaw Plc
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between McGrath and Renishaw is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding McGrath RentCorp and Renishaw plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renishaw plc 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 Renishaw Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renishaw plc has no effect on the direction of McGrath RentCorp i.e., McGrath RentCorp and Renishaw Plc go up and down completely randomly.
Pair Corralation between McGrath RentCorp and Renishaw Plc
Given the investment horizon of 90 days McGrath RentCorp is expected to generate 0.35 times more return on investment than Renishaw Plc. However, McGrath RentCorp is 2.88 times less risky than Renishaw Plc. It trades about 0.04 of its potential returns per unit of risk. Renishaw plc is currently generating about -0.02 per unit of risk. If you would invest 8,930 in McGrath RentCorp on December 23, 2024 and sell it today you would earn a total of 2,411 from holding McGrath RentCorp or generate 27.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 29.7% |
| Values | Daily Returns |
McGrath RentCorp vs. Renishaw plc
Performance |
| Timeline |
| McGrath RentCorp |
| Renishaw plc |
McGrath RentCorp and Renishaw Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McGrath RentCorp and Renishaw Plc
The main advantage of trading using opposite McGrath RentCorp and Renishaw Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McGrath RentCorp position performs unexpectedly, Renishaw Plc 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 Renishaw Plc will offset losses from the drop in Renishaw Plc'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 |
| Renishaw Plc vs. ESCO Technologies | Renishaw Plc vs. Badger Meter | Renishaw Plc vs. Novanta | Renishaw Plc vs. Sensata Technologies Holding |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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