Correlation Between Tri Pointe and UNITED RENTALS
Can any of the company-specific risk be diversified away by investing in both Tri Pointe 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 Tri Pointe and UNITED RENTALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tri Pointe Homes and UNITED RENTALS, you can compare the effects of market volatilities on Tri Pointe 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 Tri Pointe with a short position of UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tri Pointe and UNITED RENTALS.
Diversification Opportunities for Tri Pointe and UNITED RENTALS
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tri and UNITED is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tri Pointe Homes and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS and Tri Pointe 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 Tri Pointe Homes 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 Tri Pointe i.e., Tri Pointe and UNITED RENTALS go up and down completely randomly.
Pair Corralation between Tri Pointe and UNITED RENTALS
Assuming the 90 days horizon Tri Pointe is expected to generate 2.45 times less return on investment than UNITED RENTALS. But when comparing it to its historical volatility, Tri Pointe Homes is 1.01 times less risky than UNITED RENTALS. It trades about 0.03 of its potential returns per unit of risk. UNITED RENTALS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 59,227 in UNITED RENTALS on September 21, 2024 and sell it today you would earn a total of 10,153 from holding UNITED RENTALS or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tri Pointe Homes vs. UNITED RENTALS
Performance |
| Timeline |
| Tri Pointe Homes |
| UNITED RENTALS |
Tri Pointe and UNITED RENTALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tri Pointe and UNITED RENTALS
The main advantage of trading using opposite Tri Pointe and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tri Pointe 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.| Tri Pointe vs. TRAINLINE PLC LS | Tri Pointe vs. MCEWEN MINING INC | Tri Pointe vs. Calibre Mining Corp | Tri Pointe vs. Transportadora de Gas |
| UNITED RENTALS vs. Lion One Metals | UNITED RENTALS vs. KENNAMETAL INC | UNITED RENTALS vs. GALENA MINING LTD | UNITED RENTALS vs. Jacquet Metal Service |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |