Correlation Between UNITED RENTALS and TRANSAT AT
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and TRANSAT AT 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 TRANSAT AT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and TRANSAT AT VAR, you can compare the effects of market volatilities on UNITED RENTALS and TRANSAT AT 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 TRANSAT AT. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and TRANSAT AT.
Diversification Opportunities for UNITED RENTALS and TRANSAT AT
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UNITED and TRANSAT is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and TRANSAT AT VAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRANSAT AT VAR 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 TRANSAT AT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRANSAT AT VAR has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and TRANSAT AT go up and down completely randomly.
Pair Corralation between UNITED RENTALS and TRANSAT AT
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 0.64 times more return on investment than TRANSAT AT. However, UNITED RENTALS is 1.57 times less risky than TRANSAT AT. It trades about 0.23 of its potential returns per unit of risk. TRANSAT AT VAR is currently generating about 0.03 per unit of risk. If you would invest 68,040 in UNITED RENTALS on October 21, 2024 and sell it today you would earn a total of 5,200 from holding UNITED RENTALS or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED RENTALS vs. TRANSAT AT VAR
Performance |
| Timeline |
| UNITED RENTALS |
| TRANSAT AT VAR |
UNITED RENTALS and TRANSAT AT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and TRANSAT AT
The main advantage of trading using opposite UNITED RENTALS and TRANSAT AT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, TRANSAT AT 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 TRANSAT AT will offset losses from the drop in TRANSAT AT's long position.| UNITED RENTALS vs. Datang International Power | UNITED RENTALS vs. Cairo Communication SpA | UNITED RENTALS vs. Information Services International Dentsu | UNITED RENTALS vs. Telecom Argentina SA |
| TRANSAT AT vs. Air Lease | TRANSAT AT vs. LPKF Laser Electronics | TRANSAT AT vs. Global Ship Lease | TRANSAT AT vs. UNITED RENTALS |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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