Correlation Between United Rentals and Transocean
Can any of the company-specific risk be diversified away by investing in both United Rentals and Transocean 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 Transocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Transocean, you can compare the effects of market volatilities on United Rentals and Transocean 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 Transocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Transocean.
Diversification Opportunities for United Rentals and Transocean
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Transocean is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Transocean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transocean 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 Transocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transocean has no effect on the direction of United Rentals i.e., United Rentals and Transocean go up and down completely randomly.
Pair Corralation between United Rentals and Transocean
Assuming the 90 days trading horizon United Rentals is expected to generate 0.79 times more return on investment than Transocean. However, United Rentals is 1.27 times less risky than Transocean. It trades about 0.09 of its potential returns per unit of risk. Transocean is currently generating about 0.02 per unit of risk. If you would invest 6,318 in United Rentals on September 12, 2024 and sell it today you would earn a total of 10,962 from holding United Rentals or generate 173.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
United Rentals vs. Transocean
Performance |
| Timeline |
| United Rentals |
| Transocean |
United Rentals and Transocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Transocean
The main advantage of trading using opposite United Rentals and Transocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Transocean 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 Transocean will offset losses from the drop in Transocean's long position.| United Rentals vs. Localiza Rent a | United Rentals vs. Movida Participaes SA | United Rentals vs. Fundo Investimento Imobiliario | United Rentals vs. LESTE FDO INV |
| Transocean vs. Global X Funds | Transocean vs. Waste Management | Transocean vs. GP Investments | Transocean vs. Apartment Investment and |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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