Correlation Between UNITED RENTALS and Edwards Lifesciences
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Edwards Lifesciences 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 Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Edwards Lifesciences, you can compare the effects of market volatilities on UNITED RENTALS and Edwards Lifesciences 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 Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Edwards Lifesciences.
Diversification Opportunities for UNITED RENTALS and Edwards Lifesciences
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UNITED and Edwards is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Edwards Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences 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 Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Edwards Lifesciences go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Edwards Lifesciences
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 0.72 times more return on investment than Edwards Lifesciences. However, UNITED RENTALS is 1.39 times less risky than Edwards Lifesciences. It trades about 0.13 of its potential returns per unit of risk. Edwards Lifesciences is currently generating about -0.03 per unit of risk. If you would invest 57,554 in UNITED RENTALS on September 3, 2024 and sell it today you would earn a total of 24,426 from holding UNITED RENTALS or generate 42.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
UNITED RENTALS vs. Edwards Lifesciences
Performance |
Timeline |
UNITED RENTALS |
Edwards Lifesciences |
UNITED RENTALS and Edwards Lifesciences Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UNITED RENTALS and Edwards Lifesciences
The main advantage of trading using opposite UNITED RENTALS and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Edwards Lifesciences 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 Edwards Lifesciences will offset losses from the drop in Edwards Lifesciences' 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 |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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