Correlation Between METTLER TOLEDO and UNITED RENTALS
Can any of the company-specific risk be diversified away by investing in both METTLER TOLEDO 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 METTLER TOLEDO and UNITED RENTALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METTLER TOLEDO INTL and UNITED RENTALS, you can compare the effects of market volatilities on METTLER TOLEDO 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 METTLER TOLEDO with a short position of UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of METTLER TOLEDO and UNITED RENTALS.
Diversification Opportunities for METTLER TOLEDO and UNITED RENTALS
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between METTLER and UNITED is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding METTLER TOLEDO INTL and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS and METTLER TOLEDO 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 METTLER TOLEDO INTL 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 METTLER TOLEDO i.e., METTLER TOLEDO and UNITED RENTALS go up and down completely randomly.
Pair Corralation between METTLER TOLEDO and UNITED RENTALS
Assuming the 90 days trading horizon METTLER TOLEDO INTL is expected to under-perform the UNITED RENTALS. But the stock apears to be less risky and, when comparing its historical volatility, METTLER TOLEDO INTL is 1.04 times less risky than UNITED RENTALS. The stock trades about -0.14 of its potential returns per unit of risk. The UNITED RENTALS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 76,287 in UNITED RENTALS on August 25, 2024 and sell it today you would earn a total of 3,573 from holding UNITED RENTALS or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
METTLER TOLEDO INTL vs. UNITED RENTALS
Performance |
| Timeline |
| METTLER TOLEDO INTL |
| UNITED RENTALS |
METTLER TOLEDO and UNITED RENTALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METTLER TOLEDO and UNITED RENTALS
The main advantage of trading using opposite METTLER TOLEDO and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METTLER TOLEDO 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's long position.| METTLER TOLEDO vs. Apple Inc | METTLER TOLEDO vs. Apple Inc | METTLER TOLEDO vs. Apple Inc | METTLER TOLEDO vs. Apple Inc |
| UNITED RENTALS vs. CONAGRA FOODS | UNITED RENTALS vs. ON SEMICONDUCTOR | UNITED RENTALS vs. JJ SNACK FOODS | UNITED RENTALS vs. PT Indofood Sukses |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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