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 SPADR 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
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NIPPON and UNITED is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON STEEL SPADR 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 SPADR 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 SPADR is expected to generate 4.4 times more return on investment than UNITED RENTALS. However, NIPPON STEEL is 4.4 times more volatile than UNITED RENTALS. It trades about 0.04 of its potential returns per unit of risk. UNITED RENTALS is currently generating about 0.09 per unit of risk. If you would invest 465.00 in NIPPON STEEL SPADR on September 3, 2024 and sell it today you would earn a total of 150.00 from holding NIPPON STEEL SPADR or generate 32.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIPPON STEEL SPADR vs. UNITED RENTALS
Performance |
| Timeline |
| NIPPON STEEL SPADR |
| 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's long position.| NIPPON STEEL vs. UNITED RENTALS | NIPPON STEEL vs. PARKEN Sport Entertainment | NIPPON STEEL vs. ADRIATIC METALS LS 013355 | NIPPON STEEL vs. Eastman Chemical |
| UNITED RENTALS vs. Universal Display | UNITED RENTALS vs. PLAYTIKA HOLDING DL 01 | UNITED RENTALS vs. Ming Le Sports | UNITED RENTALS vs. JD SPORTS FASH |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |