Correlation Between United Rentals and Truist Financial
Can any of the company-specific risk be diversified away by investing in both United Rentals and Truist Financial 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 Truist Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Truist Financial, you can compare the effects of market volatilities on United Rentals and Truist Financial 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 Truist Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Truist Financial.
Diversification Opportunities for United Rentals and Truist Financial
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Truist is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial 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 Truist Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truist Financial has no effect on the direction of United Rentals i.e., United Rentals and Truist Financial go up and down completely randomly.
Pair Corralation between United Rentals and Truist Financial
Assuming the 90 days trading horizon United Rentals is expected to generate 5.0 times more return on investment than Truist Financial. However, United Rentals is 5.0 times more volatile than Truist Financial. It trades about 0.09 of its potential returns per unit of risk. Truist Financial is currently generating about 0.3 per unit of risk. If you would invest 15,536 in United Rentals on October 20, 2024 and sell it today you would earn a total of 1,200 from holding United Rentals or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Truist Financial
Performance |
| Timeline |
| United Rentals |
| Truist Financial |
United Rentals and Truist Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Truist Financial
The main advantage of trading using opposite United Rentals and Truist Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Truist Financial 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 Truist Financial will offset losses from the drop in Truist Financial's long position.| United Rentals vs. NXP Semiconductors NV | United Rentals vs. Sumitomo Mitsui Financial | United Rentals vs. Alaska Air Group, | United Rentals vs. Broadridge Financial Solutions, |
| Truist Financial vs. Mangels Industrial SA | Truist Financial vs. United Rentals | Truist Financial vs. Verizon Communications | Truist Financial vs. Check Point Software |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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