Correlation Between UNITED RENTALS and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Fevertree Drinks 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 Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Fevertree Drinks Plc, you can compare the effects of market volatilities on UNITED RENTALS and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Fevertree Drinks.
Diversification Opportunities for UNITED RENTALS and Fevertree Drinks
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between UNITED and Fevertree is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Fevertree Drinks go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Fevertree Drinks
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 1.33 times more return on investment than Fevertree Drinks. However, UNITED RENTALS is 1.33 times more volatile than Fevertree Drinks Plc. It trades about 0.16 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.16 per unit of risk. If you would invest 74,411 in UNITED RENTALS on August 31, 2024 and sell it today you would earn a total of 6,409 from holding UNITED RENTALS or generate 8.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
UNITED RENTALS vs. Fevertree Drinks Plc
Performance |
| Timeline |
| UNITED RENTALS |
| Fevertree Drinks Plc |
UNITED RENTALS and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Fevertree Drinks
The main advantage of trading using opposite UNITED RENTALS and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| UNITED RENTALS vs. PLAYTECH | UNITED RENTALS vs. KOOL2PLAY SA ZY | UNITED RENTALS vs. LG Display Co | UNITED RENTALS vs. ePlay Digital |
| Fevertree Drinks vs. PICKN PAY STORES | Fevertree Drinks vs. Vastned Retail NV | Fevertree Drinks vs. COSTCO WHOLESALE CDR | Fevertree Drinks vs. UNITED RENTALS |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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