Correlation Between UNITED RENTALS and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Gamma Communications 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 Gamma Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Gamma Communications plc, you can compare the effects of market volatilities on UNITED RENTALS and Gamma Communications 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Gamma Communications.
Diversification Opportunities for UNITED RENTALS and Gamma Communications
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UNITED and Gamma is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Gamma Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications plc 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications plc has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Gamma Communications go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Gamma Communications
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 1.71 times more return on investment than Gamma Communications. However, UNITED RENTALS is 1.71 times more volatile than Gamma Communications plc. It trades about 0.17 of its potential returns per unit of risk. Gamma Communications plc is currently generating about -0.06 per unit of risk. If you would invest 74,970 in UNITED RENTALS on August 29, 2024 and sell it today you would earn a total of 7,050 from holding UNITED RENTALS or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED RENTALS vs. Gamma Communications plc
Performance |
| Timeline |
| UNITED RENTALS |
| Gamma Communications plc |
UNITED RENTALS and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Gamma Communications
The main advantage of trading using opposite UNITED RENTALS and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| UNITED RENTALS vs. Laureate Education | UNITED RENTALS vs. Darden Restaurants | UNITED RENTALS vs. MEDICAL FACILITIES NEW | UNITED RENTALS vs. ScanSource |
| Gamma Communications vs. QINGCI GAMES INC | Gamma Communications vs. TROPHY GAMES DEV | Gamma Communications vs. GigaMedia | Gamma Communications vs. Perseus Mining Limited |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |