Correlation Between Silicon Motion and UNITED RENTALS
Can any of the company-specific risk be diversified away by investing in both Silicon Motion 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 Silicon Motion and UNITED RENTALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silicon Motion Technology and UNITED RENTALS, you can compare the effects of market volatilities on Silicon Motion 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 Silicon Motion with a short position of UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silicon Motion and UNITED RENTALS.
Diversification Opportunities for Silicon Motion and UNITED RENTALS
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Silicon and UNITED is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Silicon Motion Technology and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS and Silicon Motion 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 Silicon Motion Technology 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 Silicon Motion i.e., Silicon Motion and UNITED RENTALS go up and down completely randomly.
Pair Corralation between Silicon Motion and UNITED RENTALS
Assuming the 90 days trading horizon Silicon Motion Technology is expected to under-perform the UNITED RENTALS. In addition to that, Silicon Motion is 1.08 times more volatile than UNITED RENTALS. It trades about -0.1 of its total potential returns per unit of risk. UNITED RENTALS is currently generating about 0.2 per unit of volatility. If you would invest 66,980 in UNITED RENTALS on November 5, 2024 and sell it today you would earn a total of 5,520 from holding UNITED RENTALS or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silicon Motion Technology vs. UNITED RENTALS
Performance |
| Timeline |
| Silicon Motion Technology |
| UNITED RENTALS |
Silicon Motion and UNITED RENTALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silicon Motion and UNITED RENTALS
The main advantage of trading using opposite Silicon Motion and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicon Motion 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.| Silicon Motion vs. Goodyear Tire Rubber | Silicon Motion vs. Apollo Investment Corp | Silicon Motion vs. SEI INVESTMENTS | Silicon Motion vs. Sumitomo Rubber Industries |
| UNITED RENTALS vs. Transport International Holdings | UNITED RENTALS vs. Aluminum of | UNITED RENTALS vs. China Medical System | UNITED RENTALS vs. ARDAGH METAL PACDL 0001 |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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