Correlation Between UNITED RENTALS and Fortive
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Fortive 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 Fortive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Fortive, you can compare the effects of market volatilities on UNITED RENTALS and Fortive 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 Fortive. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Fortive.
Diversification Opportunities for UNITED RENTALS and Fortive
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between UNITED and Fortive is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Fortive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive 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 Fortive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Fortive go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Fortive
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 1.95 times more return on investment than Fortive. However, UNITED RENTALS is 1.95 times more volatile than Fortive. It trades about 0.22 of its potential returns per unit of risk. Fortive is currently generating about 0.37 per unit of risk. If you would invest 67,680 in UNITED RENTALS on November 3, 2024 and sell it today you would earn a total of 6,480 from holding UNITED RENTALS or generate 9.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED RENTALS vs. Fortive
Performance |
| Timeline |
| UNITED RENTALS |
| Fortive |
UNITED RENTALS and Fortive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Fortive
The main advantage of trading using opposite UNITED RENTALS and Fortive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Fortive 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 Fortive will offset losses from the drop in Fortive's long position.| UNITED RENTALS vs. Aedas Homes SA | UNITED RENTALS vs. Aristocrat Leisure Limited | UNITED RENTALS vs. Haier Smart Home | UNITED RENTALS vs. CENTURIA OFFICE REIT |
| Fortive vs. COMPUTERSHARE | Fortive vs. PACIFIC ONLINE | Fortive vs. UNIVMUSIC GRPADR050 | Fortive vs. GMO Internet |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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