Correlation Between UNITED RENTALS and Virtus Investment
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Virtus Investment 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 Virtus Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Virtus Investment Partners, you can compare the effects of market volatilities on UNITED RENTALS and Virtus Investment 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 Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Virtus Investment.
Diversification Opportunities for UNITED RENTALS and Virtus Investment
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between UNITED and Virtus is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Virtus Investment go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Virtus Investment
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 1.16 times more return on investment than Virtus Investment. However, UNITED RENTALS is 1.16 times more volatile than Virtus Investment Partners. It trades about 0.09 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about 0.04 per unit of risk. If you would invest 33,134 in UNITED RENTALS on August 30, 2024 and sell it today you would earn a total of 47,686 from holding UNITED RENTALS or generate 143.92% 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. Virtus Investment Partners
Performance |
| Timeline |
| UNITED RENTALS |
| Virtus Investment |
UNITED RENTALS and Virtus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Virtus Investment
The main advantage of trading using opposite UNITED RENTALS and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Virtus Investment 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 Virtus Investment will offset losses from the drop in Virtus Investment's long position.| UNITED RENTALS vs. CHEMICAL INDUSTRIES | UNITED RENTALS vs. Darden Restaurants | UNITED RENTALS vs. Microchip Technology Incorporated | UNITED RENTALS vs. Vishay Intertechnology |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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