Correlation Between Nippon Steel and United Rentals
Can any of the company-specific risk be diversified away by investing in both Nippon Steel 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 Nippon Steel and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Steel and United Rentals, you can compare the effects of market volatilities on Nippon Steel 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 Nippon Steel with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Steel and United Rentals.
Diversification Opportunities for Nippon Steel and United Rentals
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nippon and United is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Steel and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Nippon Steel 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 Nippon Steel 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 Nippon Steel i.e., Nippon Steel and United Rentals go up and down completely randomly.
Pair Corralation between Nippon Steel and United Rentals
Assuming the 90 days trading horizon Nippon Steel is expected to generate 0.72 times more return on investment than United Rentals. However, Nippon Steel is 1.38 times less risky than United Rentals. It trades about -0.23 of its potential returns per unit of risk. United Rentals is currently generating about -0.41 per unit of risk. If you would invest 1,890 in Nippon Steel on September 25, 2024 and sell it today you would lose (113.00) from holding Nippon Steel or give up 5.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nippon Steel vs. United Rentals
Performance |
| Timeline |
| Nippon Steel |
| United Rentals |
Nippon Steel and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Steel and United Rentals
The main advantage of trading using opposite Nippon Steel and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Steel 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.| Nippon Steel vs. Apple Inc | Nippon Steel vs. Apple Inc | Nippon Steel vs. Apple Inc | Nippon Steel vs. Microsoft |
| United Rentals vs. Ashtead Group plc | United Rentals vs. WillScot Mobile Mini | United Rentals vs. Avis Budget Group | 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |