Correlation Between UNITED RENTALS and Postal Savings
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Postal Savings 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 Postal Savings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Postal Savings Bank, you can compare the effects of market volatilities on UNITED RENTALS and Postal Savings 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 Postal Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Postal Savings.
Diversification Opportunities for UNITED RENTALS and Postal Savings
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and Postal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank 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 Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Postal Savings go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Postal Savings
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 2.84 times less return on investment than Postal Savings. But when comparing it to its historical volatility, UNITED RENTALS is 3.21 times less risky than Postal Savings. It trades about 0.09 of its potential returns per unit of risk. Postal Savings Bank is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7.59 in Postal Savings Bank on August 30, 2024 and sell it today you would earn a total of 46.41 from holding Postal Savings Bank or generate 611.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
UNITED RENTALS vs. Postal Savings Bank
Performance |
| Timeline |
| UNITED RENTALS |
| Postal Savings Bank |
UNITED RENTALS and Postal Savings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Postal Savings
The main advantage of trading using opposite UNITED RENTALS and Postal Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Postal Savings 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 Postal Savings will offset losses from the drop in Postal Savings' long position.| UNITED RENTALS vs. CHEMICAL INDUSTRIES | UNITED RENTALS vs. Darden Restaurants | UNITED RENTALS vs. Microchip Technology Incorporated | UNITED RENTALS vs. Vishay Intertechnology |
| Postal Savings vs. Perdoceo Education | Postal Savings vs. STRAYER EDUCATION | Postal Savings vs. Costco Wholesale Corp | Postal Savings vs. Tsingtao Brewery |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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