Correlation Between UNITED RENTALS and Warner Music
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Warner Music 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 Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Warner Music Group, you can compare the effects of market volatilities on UNITED RENTALS and Warner Music 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 Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Warner Music.
Diversification Opportunities for UNITED RENTALS and Warner Music
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and Warner is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Music Group 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 Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Warner Music go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Warner Music
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 1.28 times more return on investment than Warner Music. However, UNITED RENTALS is 1.28 times more volatile than Warner Music Group. It trades about 0.07 of its potential returns per unit of risk. Warner Music Group is currently generating about 0.05 per unit of risk. If you would invest 59,227 in UNITED RENTALS on September 21, 2024 and sell it today you would earn a total of 10,153 from holding UNITED RENTALS or generate 17.14% 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. Warner Music Group
Performance |
| Timeline |
| UNITED RENTALS |
| Warner Music Group |
UNITED RENTALS and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Warner Music
The main advantage of trading using opposite UNITED RENTALS and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Warner Music 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 Warner Music will offset losses from the drop in Warner Music's long position.| UNITED RENTALS vs. Lion One Metals | UNITED RENTALS vs. KENNAMETAL INC | UNITED RENTALS vs. GALENA MINING LTD | UNITED RENTALS vs. Jacquet Metal Service |
| Warner Music vs. The Walt Disney | Warner Music vs. Charter Communications | Warner Music vs. Superior Plus Corp | Warner Music vs. SIVERS SEMICONDUCTORS AB |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |