Correlation Between UNITED RENTALS and MIRAMAR HOTEL
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and MIRAMAR HOTEL 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 MIRAMAR HOTEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and MIRAMAR HOTEL INV, you can compare the effects of market volatilities on UNITED RENTALS and MIRAMAR HOTEL 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 MIRAMAR HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and MIRAMAR HOTEL.
Diversification Opportunities for UNITED RENTALS and MIRAMAR HOTEL
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and MIRAMAR is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and MIRAMAR HOTEL INV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIRAMAR HOTEL INV 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 MIRAMAR HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIRAMAR HOTEL INV has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and MIRAMAR HOTEL go up and down completely randomly.
Pair Corralation between UNITED RENTALS and MIRAMAR HOTEL
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 0.85 times more return on investment than MIRAMAR HOTEL. However, UNITED RENTALS is 1.17 times less risky than MIRAMAR HOTEL. It trades about 0.09 of its potential returns per unit of risk. MIRAMAR HOTEL INV is currently generating about 0.06 per unit of risk. If you would invest 32,051 in UNITED RENTALS on September 13, 2024 and sell it today you would earn a total of 43,109 from holding UNITED RENTALS or generate 134.5% 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. MIRAMAR HOTEL INV
Performance |
| Timeline |
| UNITED RENTALS |
| MIRAMAR HOTEL INV |
UNITED RENTALS and MIRAMAR HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and MIRAMAR HOTEL
The main advantage of trading using opposite UNITED RENTALS and MIRAMAR HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, MIRAMAR HOTEL 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 MIRAMAR HOTEL will offset losses from the drop in MIRAMAR HOTEL's long position.| UNITED RENTALS vs. BURLINGTON STORES | UNITED RENTALS vs. Goodyear Tire Rubber | UNITED RENTALS vs. Retail Estates NV | UNITED RENTALS vs. GRUPO CARSO A1 |
| MIRAMAR HOTEL vs. UNITED RENTALS | MIRAMAR HOTEL vs. Insurance Australia Group | MIRAMAR HOTEL vs. Air Lease | MIRAMAR HOTEL vs. The Hanover Insurance |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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