Correlation Between United Rentals and Air Lease
Can any of the company-specific risk be diversified away by investing in both United Rentals and Air Lease 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 Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Air Lease, you can compare the effects of market volatilities on United Rentals and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Air Lease.
Diversification Opportunities for United Rentals and Air Lease
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Air is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of United Rentals i.e., United Rentals and Air Lease go up and down completely randomly.
Pair Corralation between United Rentals and Air Lease
Assuming the 90 days horizon United Rentals is expected to generate 1.7 times less return on investment than Air Lease. In addition to that, United Rentals is 1.81 times more volatile than Air Lease. It trades about 0.13 of its total potential returns per unit of risk. Air Lease is currently generating about 0.39 per unit of volatility. If you would invest 4,120 in Air Lease on August 28, 2024 and sell it today you would earn a total of 720.00 from holding Air Lease or generate 17.48% 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. Air Lease
Performance |
| Timeline |
| United Rentals |
| Air Lease |
United Rentals and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Air Lease
The main advantage of trading using opposite United Rentals and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| United Rentals vs. Superior Plus Corp | United Rentals vs. NMI Holdings | United Rentals vs. Origin Agritech | United Rentals vs. SIVERS SEMICONDUCTORS AB |
| Air Lease vs. SENECA FOODS A | Air Lease vs. TreeHouse Foods | Air Lease vs. Transportadora de Gas | Air Lease vs. BII Railway Transportation |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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