Correlation Between United Rentals and METISA Metalrgica
Can any of the company-specific risk be diversified away by investing in both United Rentals and METISA Metalrgica 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 METISA Metalrgica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and METISA Metalrgica Timboense, you can compare the effects of market volatilities on United Rentals and METISA Metalrgica 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 METISA Metalrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and METISA Metalrgica.
Diversification Opportunities for United Rentals and METISA Metalrgica
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and METISA is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica 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 METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of United Rentals i.e., United Rentals and METISA Metalrgica go up and down completely randomly.
Pair Corralation between United Rentals and METISA Metalrgica
Assuming the 90 days trading horizon United Rentals is expected to generate 1.56 times more return on investment than METISA Metalrgica. However, United Rentals is 1.56 times more volatile than METISA Metalrgica Timboense. It trades about 0.16 of its potential returns per unit of risk. METISA Metalrgica Timboense is currently generating about 0.07 per unit of risk. If you would invest 16,684 in United Rentals on September 2, 2024 and sell it today you would earn a total of 1,929 from holding United Rentals or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. METISA Metalrgica Timboense
Performance |
| Timeline |
| United Rentals |
| METISA Metalrgica |
United Rentals and METISA Metalrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and METISA Metalrgica
The main advantage of trading using opposite United Rentals and METISA Metalrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, METISA Metalrgica 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 METISA Metalrgica will offset losses from the drop in METISA Metalrgica's long position.The idea behind United Rentals and METISA Metalrgica Timboense pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| METISA Metalrgica vs. Fras le SA | METISA Metalrgica vs. PBG SA | METISA Metalrgica vs. Springs Global Participaes | METISA Metalrgica vs. Indstrias Romi SA |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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