Correlation Between United Rentals and HF FOODS
Can any of the company-specific risk be diversified away by investing in both United Rentals and HF FOODS 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 HF FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and HF FOODS GRP, you can compare the effects of market volatilities on United Rentals and HF FOODS 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 HF FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and HF FOODS.
Diversification Opportunities for United Rentals and HF FOODS
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and 3GX is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and HF FOODS GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF FOODS GRP 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 HF FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF FOODS GRP has no effect on the direction of United Rentals i.e., United Rentals and HF FOODS go up and down completely randomly.
Pair Corralation between United Rentals and HF FOODS
Assuming the 90 days horizon United Rentals is expected to generate 0.8 times more return on investment than HF FOODS. However, United Rentals is 1.25 times less risky than HF FOODS. It trades about 0.25 of its potential returns per unit of risk. HF FOODS GRP is currently generating about -0.34 per unit of risk. If you would invest 67,200 in United Rentals on November 3, 2024 and sell it today you would earn a total of 8,080 from holding United Rentals or generate 12.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. HF FOODS GRP
Performance |
| Timeline |
| United Rentals |
| HF FOODS GRP |
United Rentals and HF FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and HF FOODS
The main advantage of trading using opposite United Rentals and HF FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, HF FOODS 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 HF FOODS will offset losses from the drop in HF FOODS's long position.| United Rentals vs. OPKO HEALTH | United Rentals vs. Sims Metal Management | United Rentals vs. Tencent Music Entertainment | United Rentals vs. Molina Healthcare |
| HF FOODS vs. Dairy Farm International | HF FOODS vs. Choice Hotels International | HF FOODS vs. Xenia Hotels Resorts | HF FOODS vs. DALATA HOTEL |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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