Correlation Between UNITED RENTALS and INDIKA ENERGY
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and INDIKA ENERGY 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 INDIKA ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and INDIKA ENERGY, you can compare the effects of market volatilities on UNITED RENTALS and INDIKA ENERGY 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 INDIKA ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and INDIKA ENERGY.
Diversification Opportunities for UNITED RENTALS and INDIKA ENERGY
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between UNITED and INDIKA is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA ENERGY 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 INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and INDIKA ENERGY go up and down completely randomly.
Pair Corralation between UNITED RENTALS and INDIKA ENERGY
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 3.01 times less return on investment than INDIKA ENERGY. But when comparing it to its historical volatility, UNITED RENTALS is 2.36 times less risky than INDIKA ENERGY. It trades about 0.23 of its potential returns per unit of risk. INDIKA ENERGY is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 7.05 in INDIKA ENERGY on October 24, 2024 and sell it today you would earn a total of 1.75 from holding INDIKA ENERGY or generate 24.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
UNITED RENTALS vs. INDIKA ENERGY
Performance |
| Timeline |
| UNITED RENTALS |
| INDIKA ENERGY |
UNITED RENTALS and INDIKA ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and INDIKA ENERGY
The main advantage of trading using opposite UNITED RENTALS and INDIKA ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, INDIKA ENERGY 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 INDIKA ENERGY will offset losses from the drop in INDIKA ENERGY's long position.| UNITED RENTALS vs. MACOM Technology Solutions | UNITED RENTALS vs. Vishay Intertechnology | UNITED RENTALS vs. TITANIUM TRANSPORTGROUP | UNITED RENTALS vs. NAGOYA RAILROAD |
| INDIKA ENERGY vs. Cass Information Systems | INDIKA ENERGY vs. UNITED RENTALS | INDIKA ENERGY vs. GRENKELEASING Dusseldorf | INDIKA ENERGY vs. DATADOT TECHNOLOGY |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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