Correlation Between UNITED RENTALS and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Singapore Airlines 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 Singapore Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Singapore Airlines Limited, you can compare the effects of market volatilities on UNITED RENTALS and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Singapore Airlines.
Diversification Opportunities for UNITED RENTALS and Singapore Airlines
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UNITED and Singapore is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Singapore Airlines go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Singapore Airlines
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 1.69 times more return on investment than Singapore Airlines. However, UNITED RENTALS is 1.69 times more volatile than Singapore Airlines Limited. It trades about 0.17 of its potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.07 per unit of risk. If you would invest 74,970 in UNITED RENTALS on August 29, 2024 and sell it today you would earn a total of 7,050 from holding UNITED RENTALS or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED RENTALS vs. Singapore Airlines Limited
Performance |
| Timeline |
| UNITED RENTALS |
| Singapore Airlines |
UNITED RENTALS and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Singapore Airlines
The main advantage of trading using opposite UNITED RENTALS and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| UNITED RENTALS vs. Laureate Education | UNITED RENTALS vs. Darden Restaurants | UNITED RENTALS vs. MEDICAL FACILITIES NEW | UNITED RENTALS vs. ScanSource |
| Singapore Airlines vs. PennyMac Mortgage Investment | Singapore Airlines vs. CosmoSteel Holdings Limited | Singapore Airlines vs. Gladstone Investment | Singapore Airlines vs. Insteel Industries |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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