Correlation Between Scholastic and United Rentals
Can any of the company-specific risk be diversified away by investing in both Scholastic 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 Scholastic and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scholastic and United Rentals, you can compare the effects of market volatilities on Scholastic 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 Scholastic with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scholastic and United Rentals.
Diversification Opportunities for Scholastic and United Rentals
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Scholastic and United is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Scholastic and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Scholastic 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 Scholastic 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 Scholastic i.e., Scholastic and United Rentals go up and down completely randomly.
Pair Corralation between Scholastic and United Rentals
Given the investment horizon of 90 days Scholastic is expected to under-perform the United Rentals. In addition to that, Scholastic is 1.08 times more volatile than United Rentals. It trades about -0.05 of its total potential returns per unit of risk. United Rentals is currently generating about 0.11 per unit of volatility. If you would invest 49,731 in United Rentals on August 27, 2024 and sell it today you would earn a total of 35,201 from holding United Rentals or generate 70.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scholastic vs. United Rentals
Performance |
| Timeline |
| Scholastic |
| United Rentals |
Scholastic and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scholastic and United Rentals
The main advantage of trading using opposite Scholastic and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scholastic 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.| Scholastic vs. New York Times | Scholastic vs. Gannett Co | Scholastic vs. Lee Enterprises Incorporated | Scholastic vs. Pearson PLC ADR |
| United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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