Correlation Between UNITED RENTALS and LOANDEPOT INC
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and LOANDEPOT INC 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 LOANDEPOT INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and LOANDEPOT INC A, you can compare the effects of market volatilities on UNITED RENTALS and LOANDEPOT INC 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 LOANDEPOT INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and LOANDEPOT INC.
Diversification Opportunities for UNITED RENTALS and LOANDEPOT INC
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and LOANDEPOT is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and LOANDEPOT INC A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOANDEPOT INC A 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 LOANDEPOT INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOANDEPOT INC A has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and LOANDEPOT INC go up and down completely randomly.
Pair Corralation between UNITED RENTALS and LOANDEPOT INC
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 0.48 times more return on investment than LOANDEPOT INC. However, UNITED RENTALS is 2.07 times less risky than LOANDEPOT INC. It trades about 0.23 of its potential returns per unit of risk. LOANDEPOT INC A is currently generating about -0.12 per unit of risk. If you would invest 67,680 in UNITED RENTALS on November 3, 2024 and sell it today you would earn a total of 6,480 from holding UNITED RENTALS or generate 9.57% 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. LOANDEPOT INC A
Performance |
| Timeline |
| UNITED RENTALS |
| LOANDEPOT INC A |
UNITED RENTALS and LOANDEPOT INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and LOANDEPOT INC
The main advantage of trading using opposite UNITED RENTALS and LOANDEPOT INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, LOANDEPOT INC 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 LOANDEPOT INC will offset losses from the drop in LOANDEPOT INC's long position.| UNITED RENTALS vs. Pure Storage | UNITED RENTALS vs. QBE Insurance Group | UNITED RENTALS vs. United Insurance Holdings | UNITED RENTALS vs. Extra Space Storage |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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