Correlation Between United Rentals and Centrais Eltricas
Can any of the company-specific risk be diversified away by investing in both United Rentals and Centrais Eltricas 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 Centrais Eltricas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Centrais Eltricas Brasileiras, you can compare the effects of market volatilities on United Rentals and Centrais Eltricas 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 Centrais Eltricas. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Centrais Eltricas.
Diversification Opportunities for United Rentals and Centrais Eltricas
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Centrais is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Centrais Eltricas Brasileiras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrais Eltricas 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 Centrais Eltricas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrais Eltricas has no effect on the direction of United Rentals i.e., United Rentals and Centrais Eltricas go up and down completely randomly.
Pair Corralation between United Rentals and Centrais Eltricas
Assuming the 90 days trading horizon United Rentals is expected to generate 6.21 times more return on investment than Centrais Eltricas. However, United Rentals is 6.21 times more volatile than Centrais Eltricas Brasileiras. It trades about 0.09 of its potential returns per unit of risk. Centrais Eltricas Brasileiras is currently generating about 0.0 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 | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
United Rentals vs. Centrais Eltricas Brasileiras
Performance |
| Timeline |
| United Rentals |
| Centrais Eltricas |
United Rentals and Centrais Eltricas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Centrais Eltricas
The main advantage of trading using opposite United Rentals and Centrais Eltricas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Centrais Eltricas 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 Centrais Eltricas will offset losses from the drop in Centrais Eltricas' 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, |
| Centrais Eltricas vs. Alaska Air Group, | Centrais Eltricas vs. Ryanair Holdings plc | Centrais Eltricas vs. Metalrgica Riosulense SA | Centrais Eltricas vs. British American Tobacco |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |