Correlation Between UNITED RENTALS and Mastercard
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Mastercard 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 Mastercard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Mastercard, you can compare the effects of market volatilities on UNITED RENTALS and Mastercard 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 Mastercard. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Mastercard.
Diversification Opportunities for UNITED RENTALS and Mastercard
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between UNITED and Mastercard is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard 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 Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Mastercard go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Mastercard
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 2.04 times more return on investment than Mastercard. However, UNITED RENTALS is 2.04 times more volatile than Mastercard. It trades about 0.11 of its potential returns per unit of risk. Mastercard is currently generating about 0.1 per unit of risk. If you would invest 35,315 in UNITED RENTALS on September 4, 2024 and sell it today you would earn a total of 46,665 from holding UNITED RENTALS or generate 132.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED RENTALS vs. Mastercard
Performance |
| Timeline |
| UNITED RENTALS |
| Mastercard |
UNITED RENTALS and Mastercard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Mastercard
The main advantage of trading using opposite UNITED RENTALS and Mastercard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Mastercard 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 Mastercard will offset losses from the drop in Mastercard's long position.| UNITED RENTALS vs. TOTAL GABON | UNITED RENTALS vs. Walgreens Boots Alliance | UNITED RENTALS vs. Peak Resources Limited |
| Mastercard vs. Molson Coors Beverage | Mastercard vs. Suntory Beverage Food | Mastercard vs. The Boston Beer | Mastercard vs. KAUFMAN ET BROAD |
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 Stocks Directory module to find actively traded stocks across global markets.
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