Correlation Between UNITED RENTALS and Siemens Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Siemens Aktiengesellscha 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 Siemens Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Siemens Aktiengesellschaft, you can compare the effects of market volatilities on UNITED RENTALS and Siemens Aktiengesellscha 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 Siemens Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Siemens Aktiengesellscha.
Diversification Opportunities for UNITED RENTALS and Siemens Aktiengesellscha
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between UNITED and Siemens is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Siemens Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Aktiengesellscha 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 Siemens Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Aktiengesellscha has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Siemens Aktiengesellscha go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Siemens Aktiengesellscha
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 1.33 times more return on investment than Siemens Aktiengesellscha. However, UNITED RENTALS is 1.33 times more volatile than Siemens Aktiengesellschaft. It trades about 0.16 of its potential returns per unit of risk. Siemens Aktiengesellschaft is currently generating about 0.09 per unit of risk. If you would invest 66,487 in UNITED RENTALS on September 2, 2024 and sell it today you would earn a total of 14,233 from holding UNITED RENTALS or generate 21.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED RENTALS vs. Siemens Aktiengesellschaft
Performance |
| Timeline |
| UNITED RENTALS |
| Siemens Aktiengesellscha |
UNITED RENTALS and Siemens Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Siemens Aktiengesellscha
The main advantage of trading using opposite UNITED RENTALS and Siemens Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Siemens Aktiengesellscha 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 Siemens Aktiengesellscha will offset losses from the drop in Siemens Aktiengesellscha's long position.| UNITED RENTALS vs. Harmony Gold Mining | UNITED RENTALS vs. GREENX METALS LTD | UNITED RENTALS vs. INDOFOOD AGRI RES | UNITED RENTALS vs. Lion One Metals |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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