Correlation Between TFS FINANCIAL and United Rentals
Can any of the company-specific risk be diversified away by investing in both TFS FINANCIAL 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 TFS FINANCIAL and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TFS FINANCIAL and United Rentals, you can compare the effects of market volatilities on TFS FINANCIAL 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 TFS FINANCIAL with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFS FINANCIAL and United Rentals.
Diversification Opportunities for TFS FINANCIAL and United Rentals
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TFS and United is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding TFS FINANCIAL and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and TFS FINANCIAL 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 TFS FINANCIAL 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 TFS FINANCIAL i.e., TFS FINANCIAL and United Rentals go up and down completely randomly.
Pair Corralation between TFS FINANCIAL and United Rentals
Assuming the 90 days trading horizon TFS FINANCIAL is expected to generate 0.69 times more return on investment than United Rentals. However, TFS FINANCIAL is 1.44 times less risky than United Rentals. It trades about -0.31 of its potential returns per unit of risk. United Rentals is currently generating about -0.5 per unit of risk. If you would invest 1,270 in TFS FINANCIAL on October 13, 2024 and sell it today you would lose (70.00) from holding TFS FINANCIAL or give up 5.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TFS FINANCIAL vs. United Rentals
Performance |
| Timeline |
| TFS FINANCIAL |
| United Rentals |
TFS FINANCIAL and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TFS FINANCIAL and United Rentals
The main advantage of trading using opposite TFS FINANCIAL and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFS FINANCIAL 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.| TFS FINANCIAL vs. SEI INVESTMENTS | TFS FINANCIAL vs. ULTRA CLEAN HLDGS | TFS FINANCIAL vs. ALERION CLEANPOWER | TFS FINANCIAL vs. CLEAN ENERGY FUELS |
| United Rentals vs. PLAYTIKA HOLDING DL 01 | United Rentals vs. ARISTOCRAT LEISURE | United Rentals vs. USWE SPORTS AB | United Rentals vs. PennantPark Investment |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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