Correlation Between United Rentals and CoStar
Can any of the company-specific risk be diversified away by investing in both United Rentals and CoStar 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 CoStar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and CoStar Group, you can compare the effects of market volatilities on United Rentals and CoStar 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 CoStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and CoStar.
Diversification Opportunities for United Rentals and CoStar
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and CoStar is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar 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 CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of United Rentals i.e., United Rentals and CoStar go up and down completely randomly.
Pair Corralation between United Rentals and CoStar
Assuming the 90 days trading horizon United Rentals is expected to generate 1.07 times more return on investment than CoStar. However, United Rentals is 1.07 times more volatile than CoStar Group. It trades about 0.15 of its potential returns per unit of risk. CoStar Group is currently generating about 0.07 per unit of risk. If you would invest 12,121 in United Rentals on September 3, 2024 and sell it today you would earn a total of 6,408 from holding United Rentals or generate 52.87% 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. CoStar Group
Performance |
| Timeline |
| United Rentals |
| CoStar Group |
United Rentals and CoStar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and CoStar
The main advantage of trading using opposite United Rentals and CoStar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, CoStar 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 CoStar will offset losses from the drop in CoStar's long position.| United Rentals vs. Localiza Rent a | United Rentals vs. Movida Participaes SA | United Rentals vs. Fundo Investimento Imobiliario | United Rentals vs. Fras le SA |
| CoStar vs. salesforce inc | CoStar vs. Southwest Airlines Co | CoStar vs. Zoom Video Communications | CoStar vs. United Airlines Holdings |
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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