Correlation Between United Rentals and DXC Technology
Can any of the company-specific risk be diversified away by investing in both United Rentals and DXC Technology 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 DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and DXC Technology Co, you can compare the effects of market volatilities on United Rentals and DXC Technology 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 DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and DXC Technology.
Diversification Opportunities for United Rentals and DXC Technology
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and DXC is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology 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 DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of United Rentals i.e., United Rentals and DXC Technology go up and down completely randomly.
Pair Corralation between United Rentals and DXC Technology
Assuming the 90 days horizon United Rentals is expected to generate 1.01 times less return on investment than DXC Technology. In addition to that, United Rentals is 1.17 times more volatile than DXC Technology Co. It trades about 0.16 of its total potential returns per unit of risk. DXC Technology Co is currently generating about 0.19 per unit of volatility. If you would invest 1,859 in DXC Technology Co on September 3, 2024 and sell it today you would earn a total of 227.00 from holding DXC Technology Co or generate 12.21% 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. DXC Technology Co
Performance |
| Timeline |
| United Rentals |
| DXC Technology |
United Rentals and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and DXC Technology
The main advantage of trading using opposite United Rentals and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.| United Rentals vs. Ashtead Group plc | United Rentals vs. WillScot Mobile Mini | United Rentals vs. Sixt SE |
| DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc | DXC Technology vs. Apple Inc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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