Correlation Between UNITED RENTALS and PEH WERTPAPIER
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and PEH WERTPAPIER 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 PEH WERTPAPIER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and PEH WERTPAPIER, you can compare the effects of market volatilities on UNITED RENTALS and PEH WERTPAPIER 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 PEH WERTPAPIER. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and PEH WERTPAPIER.
Diversification Opportunities for UNITED RENTALS and PEH WERTPAPIER
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between UNITED and PEH is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and PEH WERTPAPIER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEH WERTPAPIER 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 PEH WERTPAPIER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEH WERTPAPIER has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and PEH WERTPAPIER go up and down completely randomly.
Pair Corralation between UNITED RENTALS and PEH WERTPAPIER
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 1.55 times more return on investment than PEH WERTPAPIER. However, UNITED RENTALS is 1.55 times more volatile than PEH WERTPAPIER. It trades about 0.09 of its potential returns per unit of risk. PEH WERTPAPIER is currently generating about 0.05 per unit of risk. If you would invest 33,426 in UNITED RENTALS on September 5, 2024 and sell it today you would earn a total of 47,714 from holding UNITED RENTALS or generate 142.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
UNITED RENTALS vs. PEH WERTPAPIER
Performance |
| Timeline |
| UNITED RENTALS |
| PEH WERTPAPIER |
UNITED RENTALS and PEH WERTPAPIER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and PEH WERTPAPIER
The main advantage of trading using opposite UNITED RENTALS and PEH WERTPAPIER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, PEH WERTPAPIER 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 PEH WERTPAPIER will offset losses from the drop in PEH WERTPAPIER's long position.| UNITED RENTALS vs. PT Global Mediacom | UNITED RENTALS vs. Hollywood Bowl Group | UNITED RENTALS vs. ATRESMEDIA | UNITED RENTALS vs. RCS MediaGroup SpA |
| PEH WERTPAPIER vs. China Resources Beer | PEH WERTPAPIER vs. Fast Retailing Co | PEH WERTPAPIER vs. UNITED RENTALS | PEH WERTPAPIER vs. United Rentals |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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