Correlation Between United Rentals and Apartment Investment
Can any of the company-specific risk be diversified away by investing in both United Rentals and Apartment Investment 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 United Rentals and Apartment Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Apartment Investment and, you can compare the effects of market volatilities on United Rentals and Apartment Investment 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 United Rentals with a short position of Apartment Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Apartment Investment.
Diversification Opportunities for United Rentals and Apartment Investment
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Apartment is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and and United Rentals 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 United Rentals are associated (or correlated) with Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of United Rentals i.e., United Rentals and Apartment Investment go up and down completely randomly.
Pair Corralation between United Rentals and Apartment Investment
Assuming the 90 days trading horizon United Rentals is expected to generate 1.81 times more return on investment than Apartment Investment. However, United Rentals is 1.81 times more volatile than Apartment Investment and. It trades about 0.15 of its potential returns per unit of risk. Apartment Investment and is currently generating about 0.16 per unit of risk. If you would invest 16,843 in United Rentals on August 31, 2024 and sell it today you would earn a total of 1,847 from holding United Rentals or generate 10.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Apartment Investment and
Performance |
| Timeline |
| United Rentals |
| Apartment Investment and |
United Rentals and Apartment Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Apartment Investment
The main advantage of trading using opposite United Rentals and Apartment Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Apartment Investment 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 Apartment Investment will offset losses from the drop in Apartment Investment's long position.| United Rentals vs. Localiza Rent a | United Rentals vs. Vamos Locao de | United Rentals vs. Movida Participaes SA |
| Apartment Investment vs. Fras le SA | Apartment Investment vs. Energisa SA | Apartment Investment vs. Clave Indices De | Apartment Investment vs. BTG Pactual Logstica |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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