Correlation Between United Rentals and Alaska Air
Can any of the company-specific risk be diversified away by investing in both United Rentals and Alaska Air 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 Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Alaska Air Group,, you can compare the effects of market volatilities on United Rentals and Alaska Air 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 Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Alaska Air.
Diversification Opportunities for United Rentals and Alaska Air
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Alaska is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Alaska Air Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group, 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group, has no effect on the direction of United Rentals i.e., United Rentals and Alaska Air go up and down completely randomly.
Pair Corralation between United Rentals and Alaska Air
Assuming the 90 days trading horizon United Rentals is expected to generate 1.0 times more return on investment than Alaska Air. However, United Rentals is 1.0 times less risky than Alaska Air. It trades about 0.07 of its potential returns per unit of risk. Alaska Air Group, is currently generating about 0.06 per unit of risk. If you would invest 6,991 in United Rentals on October 11, 2024 and sell it today you would earn a total of 7,657 from holding United Rentals or generate 109.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
United Rentals vs. Alaska Air Group,
Performance |
| Timeline |
| United Rentals |
| Alaska Air Group, |
United Rentals and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Alaska Air
The main advantage of trading using opposite United Rentals and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| United Rentals vs. T Mobile | United Rentals vs. Zoom Video Communications | United Rentals vs. Warner Music Group | United Rentals vs. Annaly Capital Management, |
| Alaska Air vs. United Rentals | Alaska Air vs. Sumitomo Mitsui Financial | Alaska Air vs. salesforce inc | Alaska Air vs. Prudential Financial |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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