Correlation Between Retail Estates and United Rentals
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and United Rentals, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and United Rentals.
Diversification Opportunities for Retail Estates and United Rentals
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Retail and United is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and United Rentals go up and down completely randomly.
Pair Corralation between Retail Estates and United Rentals
Assuming the 90 days horizon Retail Estates is expected to generate 4.46 times less return on investment than United Rentals. But when comparing it to its historical volatility, Retail Estates NV is 1.88 times less risky than United Rentals. It trades about 0.04 of its potential returns per unit of risk. United Rentals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 33,148 in United Rentals on August 30, 2024 and sell it today you would earn a total of 50,152 from holding United Rentals or generate 151.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. United Rentals
Performance |
| Timeline |
| Retail Estates NV |
| United Rentals |
Retail Estates and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and United Rentals
The main advantage of trading using opposite Retail Estates and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. Simon Property Group | Retail Estates vs. Realty Income | Retail Estates vs. Kimco Realty | Retail Estates vs. Range Resources Corp |
| United Rentals vs. Microchip Technology Incorporated | United Rentals vs. SCIENCE IN SPORT | United Rentals vs. SMA Solar Technology | United Rentals vs. COLUMBIA SPORTSWEAR |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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