Correlation Between UNITED RENTALS and KOOL2PLAY
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and KOOL2PLAY 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 KOOL2PLAY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and KOOL2PLAY SA ZY, you can compare the effects of market volatilities on UNITED RENTALS and KOOL2PLAY 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 KOOL2PLAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and KOOL2PLAY.
Diversification Opportunities for UNITED RENTALS and KOOL2PLAY
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UNITED and KOOL2PLAY is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and KOOL2PLAY SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOOL2PLAY SA ZY 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 KOOL2PLAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOOL2PLAY SA ZY has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and KOOL2PLAY go up and down completely randomly.
Pair Corralation between UNITED RENTALS and KOOL2PLAY
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 0.36 times more return on investment than KOOL2PLAY. However, UNITED RENTALS is 2.75 times less risky than KOOL2PLAY. It trades about 0.09 of its potential returns per unit of risk. KOOL2PLAY SA ZY is currently generating about -0.02 per unit of risk. If you would invest 33,114 in UNITED RENTALS on September 3, 2024 and sell it today you would earn a total of 47,606 from holding UNITED RENTALS or generate 143.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED RENTALS vs. KOOL2PLAY SA ZY
Performance |
| Timeline |
| UNITED RENTALS |
| KOOL2PLAY SA ZY |
UNITED RENTALS and KOOL2PLAY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and KOOL2PLAY
The main advantage of trading using opposite UNITED RENTALS and KOOL2PLAY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, KOOL2PLAY 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 KOOL2PLAY will offset losses from the drop in KOOL2PLAY's long position.| UNITED RENTALS vs. Universal Display | UNITED RENTALS vs. PLAYTIKA HOLDING DL 01 | UNITED RENTALS vs. Ming Le Sports | UNITED RENTALS vs. JD SPORTS FASH |
| KOOL2PLAY vs. Nintendo Co | KOOL2PLAY vs. Nintendo Co | KOOL2PLAY vs. Sea Limited | KOOL2PLAY vs. Take Two Interactive Software |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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