Correlation Between UNITED RENTALS and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Citic Telecom 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 Citic Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Citic Telecom International, you can compare the effects of market volatilities on UNITED RENTALS and Citic Telecom 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 Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Citic Telecom.
Diversification Opportunities for UNITED RENTALS and Citic Telecom
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and Citic is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Citic Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Telecom Intern 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 Citic Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Telecom Intern has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Citic Telecom go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Citic Telecom
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 1.18 times more return on investment than Citic Telecom. However, UNITED RENTALS is 1.18 times more volatile than Citic Telecom International. It trades about 0.17 of its potential returns per unit of risk. Citic Telecom International is currently generating about 0.09 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED RENTALS vs. Citic Telecom International
Performance |
| Timeline |
| UNITED RENTALS |
| Citic Telecom Intern |
UNITED RENTALS and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Citic Telecom
The main advantage of trading using opposite UNITED RENTALS and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Citic Telecom 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 Citic Telecom will offset losses from the drop in Citic Telecom's long position.| UNITED RENTALS vs. Laureate Education | UNITED RENTALS vs. Darden Restaurants | UNITED RENTALS vs. MEDICAL FACILITIES NEW | UNITED RENTALS vs. ScanSource |
| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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