Correlation Between United Rentals and Dominion Energy
Can any of the company-specific risk be diversified away by investing in both United Rentals and Dominion Energy 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 Dominion Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Dominion Energy, you can compare the effects of market volatilities on United Rentals and Dominion Energy 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 Dominion Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Dominion Energy.
Diversification Opportunities for United Rentals and Dominion Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Dominion is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Dominion Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominion Energy 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 Dominion Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominion Energy has no effect on the direction of United Rentals i.e., United Rentals and Dominion Energy go up and down completely randomly.
Pair Corralation between United Rentals and Dominion Energy
Assuming the 90 days horizon United Rentals is expected to generate 2.81 times more return on investment than Dominion Energy. However, United Rentals is 2.81 times more volatile than Dominion Energy. It trades about 0.17 of its potential returns per unit of risk. Dominion Energy is currently generating about 0.16 per unit of risk. If you would invest 72,235 in United Rentals on September 4, 2024 and sell it today you would earn a total of 9,405 from holding United Rentals or generate 13.02% 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. Dominion Energy
Performance |
| Timeline |
| United Rentals |
| Dominion Energy |
United Rentals and Dominion Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Dominion Energy
The main advantage of trading using opposite United Rentals and Dominion Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Dominion Energy 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 Dominion Energy will offset losses from the drop in Dominion Energy's long position.| United Rentals vs. Ashtead Group plc | United Rentals vs. WillScot Mobile Mini | United Rentals vs. Sixt SE |
| Dominion Energy vs. Mobilezone Holding AG | Dominion Energy vs. United Rentals | Dominion Energy vs. Tower One Wireless | Dominion Energy vs. GEAR4MUSIC LS 10 |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |