Correlation Between United Rentals and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both United Rentals and CDN IMPERIAL 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 CDN IMPERIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and CDN IMPERIAL BANK, you can compare the effects of market volatilities on United Rentals and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and CDN IMPERIAL.
Diversification Opportunities for United Rentals and CDN IMPERIAL
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and CDN is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of United Rentals i.e., United Rentals and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between United Rentals and CDN IMPERIAL
Assuming the 90 days horizon United Rentals is expected to generate 1.99 times more return on investment than CDN IMPERIAL. However, United Rentals is 1.99 times more volatile than CDN IMPERIAL BANK. It trades about 0.08 of its potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.1 per unit of risk. If you would invest 33,090 in United Rentals on September 3, 2024 and sell it today you would earn a total of 47,650 from holding United Rentals or generate 144.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. CDN IMPERIAL BANK
Performance |
| Timeline |
| United Rentals |
| CDN IMPERIAL BANK |
United Rentals and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and CDN IMPERIAL
The main advantage of trading using opposite United Rentals and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.| United Rentals vs. Ashtead Group plc | United Rentals vs. WillScot Mobile Mini | United Rentals vs. Sixt SE |
| CDN IMPERIAL vs. TOTAL GABON | CDN IMPERIAL vs. Walgreens Boots Alliance | CDN IMPERIAL vs. Peak Resources Limited |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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