Correlation Between UNITED RENTALS and Hyster-Yale Materials
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Hyster-Yale 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 Hyster-Yale 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 Hyster Yale Materials Handling, you can compare the effects of market volatilities on UNITED RENTALS and Hyster-Yale 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 Hyster-Yale Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Hyster-Yale Materials.
Diversification Opportunities for UNITED RENTALS and Hyster-Yale Materials
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between UNITED and Hyster-Yale is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Hyster Yale Materials Handling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyster Yale 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 Hyster-Yale Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyster Yale Materials has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Hyster-Yale Materials go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Hyster-Yale Materials
Assuming the 90 days trading horizon UNITED RENTALS is expected to under-perform the Hyster-Yale Materials. But the stock apears to be less risky and, when comparing its historical volatility, UNITED RENTALS is 1.22 times less risky than Hyster-Yale Materials. The stock trades about -0.34 of its potential returns per unit of risk. The Hyster Yale Materials Handling is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 5,150 in Hyster Yale Materials Handling on October 17, 2024 and sell it today you would lose (210.00) from holding Hyster Yale Materials Handling or give up 4.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED RENTALS vs. Hyster Yale Materials Handling
Performance |
| Timeline |
| UNITED RENTALS |
| Hyster Yale Materials |
UNITED RENTALS and Hyster-Yale Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Hyster-Yale Materials
The main advantage of trading using opposite UNITED RENTALS and Hyster-Yale Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Hyster-Yale 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 Hyster-Yale Materials will offset losses from the drop in Hyster-Yale Materials' long position.| UNITED RENTALS vs. MCEWEN MINING INC | UNITED RENTALS vs. GALENA MINING LTD | UNITED RENTALS vs. alstria office REIT AG | UNITED RENTALS vs. KENEDIX OFFICE INV |
| Hyster-Yale Materials vs. LOANDEPOT INC A | Hyster-Yale Materials vs. TOMBADOR IRON LTD | Hyster-Yale Materials vs. Sixt Leasing SE | Hyster-Yale 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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