Correlation Between Seagate Technology and United Rentals
Can any of the company-specific risk be diversified away by investing in both Seagate Technology 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 Seagate Technology and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seagate Technology Holdings and United Rentals, you can compare the effects of market volatilities on Seagate Technology 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 Seagate Technology with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seagate Technology and United Rentals.
Diversification Opportunities for Seagate Technology and United Rentals
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Seagate and United is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology Holdings and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Seagate Technology 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 Seagate Technology Holdings 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 Seagate Technology i.e., Seagate Technology and United Rentals go up and down completely randomly.
Pair Corralation between Seagate Technology and United Rentals
Assuming the 90 days trading horizon Seagate Technology Holdings is expected to generate 1.29 times more return on investment than United Rentals. However, Seagate Technology is 1.29 times more volatile than United Rentals. It trades about 0.14 of its potential returns per unit of risk. United Rentals is currently generating about 0.07 per unit of risk. If you would invest 55,740 in Seagate Technology Holdings on November 7, 2024 and sell it today you would earn a total of 4,589 from holding Seagate Technology Holdings or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Seagate Technology Holdings vs. United Rentals
Performance |
| Timeline |
| Seagate Technology |
| United Rentals |
Seagate Technology and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seagate Technology and United Rentals
The main advantage of trading using opposite Seagate Technology and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seagate Technology 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.| Seagate Technology vs. Arista Networks | Seagate Technology vs. Dell Technologies | Seagate Technology vs. Western Digital | Seagate Technology vs. Positivo Tecnologia SA |
| United Rentals vs. Paycom Software | United Rentals vs. Take Two Interactive Software | United Rentals vs. Molson Coors Beverage | United Rentals vs. Cognizant Technology Solutions |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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