Correlation Between UNITED RENTALS and Clean Energy
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Clean Energy 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 Clean Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Clean Energy Fuels, you can compare the effects of market volatilities on UNITED RENTALS and Clean Energy 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 Clean Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Clean Energy.
Diversification Opportunities for UNITED RENTALS and Clean Energy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between UNITED and Clean is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Clean Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Energy Fuels 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 Clean Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Energy Fuels has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Clean Energy go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Clean Energy
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 2.94 times less return on investment than Clean Energy. But when comparing it to its historical volatility, UNITED RENTALS is 1.61 times less risky than Clean Energy. It trades about 0.17 of its potential returns per unit of risk. Clean Energy Fuels is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 281.00 in Clean Energy Fuels on November 9, 2024 and sell it today you would earn a total of 65.00 from holding Clean Energy Fuels or generate 23.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED RENTALS vs. Clean Energy Fuels
Performance |
| Timeline |
| UNITED RENTALS |
| Clean Energy Fuels |
UNITED RENTALS and Clean Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and Clean Energy
The main advantage of trading using opposite UNITED RENTALS and Clean Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Clean Energy 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 Clean Energy will offset losses from the drop in Clean Energy's long position.| UNITED RENTALS vs. Summit Materials | UNITED RENTALS vs. ANTA SPORTS PRODUCT | UNITED RENTALS vs. Hyster Yale Materials Handling | UNITED RENTALS vs. Goodyear Tire Rubber |
| Clean Energy vs. TOWNSQUARE MEDIA INC | Clean Energy vs. Gruppo Mutuionline SpA | Clean Energy vs. SALESFORCE INC CDR | Clean Energy vs. PENN Entertainment |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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