Correlation Between UNITED RENTALS and Laureate Education
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Laureate Education 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 Laureate Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Laureate Education, you can compare the effects of market volatilities on UNITED RENTALS and Laureate Education 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 Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Laureate Education.
Diversification Opportunities for UNITED RENTALS and Laureate Education
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and Laureate is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education 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 Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Laureate Education go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Laureate Education
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 2.79 times less return on investment than Laureate Education. But when comparing it to its historical volatility, UNITED RENTALS is 1.41 times less risky than Laureate Education. It trades about 0.16 of its potential returns per unit of risk. Laureate Education is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,400 in Laureate Education on September 1, 2024 and sell it today you would earn a total of 380.00 from holding Laureate Education or generate 27.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED RENTALS vs. Laureate Education
Performance |
| Timeline |
| UNITED RENTALS |
| Laureate Education |
UNITED RENTALS and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Laureate Education
The main advantage of trading using opposite UNITED RENTALS and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Laureate Education 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 Laureate Education will offset losses from the drop in Laureate Education's long position.| UNITED RENTALS vs. PT Global Mediacom | UNITED RENTALS vs. INTERSHOP Communications Aktiengesellschaft | UNITED RENTALS vs. Beijing Media | UNITED RENTALS vs. Iridium Communications |
| Laureate Education vs. Playa Hotels Resorts | Laureate Education vs. Madison Square Garden | Laureate Education vs. PT Bank Maybank | Laureate Education vs. KOOL2PLAY SA ZY |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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