Correlation Between United Rentals and Advanced Micro
Can any of the company-specific risk be diversified away by investing in both United Rentals and Advanced Micro 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 Advanced Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Advanced Micro Devices, you can compare the effects of market volatilities on United Rentals and Advanced Micro 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 Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Advanced Micro.
Diversification Opportunities for United Rentals and Advanced Micro
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Advanced is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of United Rentals i.e., United Rentals and Advanced Micro go up and down completely randomly.
Pair Corralation between United Rentals and Advanced Micro
Assuming the 90 days horizon United Rentals is expected to generate 0.79 times more return on investment than Advanced Micro. However, United Rentals is 1.26 times less risky than Advanced Micro. It trades about -0.16 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about -0.21 per unit of risk. If you would invest 83,752 in United Rentals on September 12, 2024 and sell it today you would lose (4,992) from holding United Rentals or give up 5.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Advanced Micro Devices
Performance |
| Timeline |
| United Rentals |
| Advanced Micro Devices |
United Rentals and Advanced Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Advanced Micro
The main advantage of trading using opposite United Rentals and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro's long position.| United Rentals vs. WillScot Mobile Mini | United Rentals vs. Superior Plus Corp | United Rentals vs. SIVERS SEMICONDUCTORS AB | United Rentals vs. Norsk Hydro ASA |
| Advanced Micro vs. XLMedia PLC | Advanced Micro vs. TOWNSQUARE MEDIA INC | Advanced Micro vs. SENECA FOODS A | Advanced Micro vs. Hollywood Bowl Group |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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