Correlation Between UNITED RENTALS and Heidelberg Materials
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Heidelberg Materials 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 Heidelberg Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Heidelberg Materials AG, you can compare the effects of market volatilities on UNITED RENTALS and Heidelberg Materials 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 Heidelberg Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Heidelberg Materials.
Diversification Opportunities for UNITED RENTALS and Heidelberg Materials
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between UNITED and Heidelberg is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Heidelberg Materials AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Materials 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 Heidelberg Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Materials has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Heidelberg Materials go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Heidelberg Materials
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 1.11 times less return on investment than Heidelberg Materials. In addition to that, UNITED RENTALS is 1.53 times more volatile than Heidelberg Materials AG. It trades about 0.07 of its total potential returns per unit of risk. Heidelberg Materials AG is currently generating about 0.12 per unit of volatility. If you would invest 5,438 in Heidelberg Materials AG on October 16, 2024 and sell it today you would earn a total of 6,822 from holding Heidelberg Materials AG or generate 125.45% 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. Heidelberg Materials AG
Performance |
| Timeline |
| UNITED RENTALS |
| Heidelberg Materials |
UNITED RENTALS and Heidelberg Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Heidelberg Materials
The main advantage of trading using opposite UNITED RENTALS and Heidelberg Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Heidelberg Materials 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 Heidelberg Materials will offset losses from the drop in Heidelberg Materials' long position.| UNITED RENTALS vs. VITEC SOFTWARE GROUP | UNITED RENTALS vs. Sqs Software Quality | UNITED RENTALS vs. GBS Software AG | UNITED RENTALS vs. CyberArk Software |
| Heidelberg Materials vs. Scandinavian Tobacco Group | Heidelberg Materials vs. BURLINGTON STORES | Heidelberg Materials vs. Burlington Stores | Heidelberg Materials 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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