Correlation Between United Rentals and Aegean Airlines
Can any of the company-specific risk be diversified away by investing in both United Rentals and Aegean Airlines 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 Aegean Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Aegean Airlines SA, you can compare the effects of market volatilities on United Rentals and Aegean Airlines 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 Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Aegean Airlines.
Diversification Opportunities for United Rentals and Aegean Airlines
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Aegean is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA 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 Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of United Rentals i.e., United Rentals and Aegean Airlines go up and down completely randomly.
Pair Corralation between United Rentals and Aegean Airlines
Assuming the 90 days horizon United Rentals is expected to generate 1.27 times more return on investment than Aegean Airlines. However, United Rentals is 1.27 times more volatile than Aegean Airlines SA. It trades about 0.05 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about -0.01 per unit of risk. If you would invest 58,717 in United Rentals on October 27, 2024 and sell it today you would earn a total of 16,423 from holding United Rentals or generate 27.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Aegean Airlines SA
Performance |
| Timeline |
| United Rentals |
| Aegean Airlines SA |
United Rentals and Aegean Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Aegean Airlines
The main advantage of trading using opposite United Rentals and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Aegean Airlines 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 Aegean Airlines will offset losses from the drop in Aegean Airlines' long position.| United Rentals vs. High Liner Foods | United Rentals vs. Tyson Foods | United Rentals vs. Molson Coors Beverage | United Rentals vs. National Beverage Corp |
| Aegean Airlines vs. MAANSHAN IRON H | Aegean Airlines vs. NEWELL RUBBERMAID | Aegean Airlines vs. CALTAGIRONE EDITORE | Aegean Airlines vs. Xiwang Special Steel |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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