Correlation Between UNITED RENTALS and MAANSHAN IRON
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and MAANSHAN IRON 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 MAANSHAN IRON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and MAANSHAN IRON H , you can compare the effects of market volatilities on UNITED RENTALS and MAANSHAN IRON 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 MAANSHAN IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and MAANSHAN IRON.
Diversification Opportunities for UNITED RENTALS and MAANSHAN IRON
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UNITED and MAANSHAN is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and MAANSHAN IRON H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAANSHAN IRON H 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 MAANSHAN IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAANSHAN IRON H has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and MAANSHAN IRON go up and down completely randomly.
Pair Corralation between UNITED RENTALS and MAANSHAN IRON
Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 2.27 times less return on investment than MAANSHAN IRON. But when comparing it to its historical volatility, UNITED RENTALS is 2.56 times less risky than MAANSHAN IRON. It trades about 0.26 of its potential returns per unit of risk. MAANSHAN IRON H is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 16.00 in MAANSHAN IRON H on November 4, 2024 and sell it today you would earn a total of 4.00 from holding MAANSHAN IRON H or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED RENTALS vs. MAANSHAN IRON H
Performance |
| Timeline |
| UNITED RENTALS |
| MAANSHAN IRON H |
UNITED RENTALS and MAANSHAN IRON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED RENTALS and MAANSHAN IRON
The main advantage of trading using opposite UNITED RENTALS and MAANSHAN IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, MAANSHAN IRON 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 MAANSHAN IRON will offset losses from the drop in MAANSHAN IRON's long position.| UNITED RENTALS vs. Apple Inc | UNITED RENTALS vs. Apple Inc | UNITED RENTALS vs. Apple Inc | UNITED RENTALS vs. Apple Inc |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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