Correlation Between McGrath RentCorp and VIACOMCBS

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Can any of the company-specific risk be diversified away by investing in both McGrath RentCorp and VIACOMCBS 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 VIACOMCBS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McGrath RentCorp and VIACOMCBS INC, you can compare the effects of market volatilities on McGrath RentCorp and VIACOMCBS 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 VIACOMCBS. Check out your portfolio center. Please also check ongoing floating volatility patterns of McGrath RentCorp and VIACOMCBS.

Diversification Opportunities for McGrath RentCorp and VIACOMCBS

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between McGrath and VIACOMCBS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding McGrath RentCorp and VIACOMCBS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIACOMCBS INC 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 VIACOMCBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIACOMCBS INC has no effect on the direction of McGrath RentCorp i.e., McGrath RentCorp and VIACOMCBS go up and down completely randomly.

Pair Corralation between McGrath RentCorp and VIACOMCBS

Given the investment horizon of 90 days McGrath RentCorp is expected to generate 1.18 times more return on investment than VIACOMCBS. However, McGrath RentCorp is 1.18 times more volatile than VIACOMCBS INC. It trades about 0.05 of its potential returns per unit of risk. VIACOMCBS INC is currently generating about 0.01 per unit of risk. If you would invest  8,956  in McGrath RentCorp on November 1, 2024 and sell it today you would earn a total of  3,475  from holding McGrath RentCorp or generate 38.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy99.16%
ValuesDaily Returns

McGrath RentCorp  vs.  VIACOMCBS INC

 Performance 
       Timeline  
McGrath RentCorp 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in McGrath RentCorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, McGrath RentCorp may actually be approaching a critical reversion point that can send shares even higher in March 2025.
VIACOMCBS INC 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in VIACOMCBS INC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, VIACOMCBS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

McGrath RentCorp and VIACOMCBS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with McGrath RentCorp and VIACOMCBS

The main advantage of trading using opposite McGrath RentCorp and VIACOMCBS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McGrath RentCorp position performs unexpectedly, VIACOMCBS 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 VIACOMCBS will offset losses from the drop in VIACOMCBS's long position.
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The idea behind McGrath RentCorp and VIACOMCBS INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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