Correlation Between United Rentals and PREMIER FOODS
Can any of the company-specific risk be diversified away by investing in both United Rentals and PREMIER 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 PREMIER 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 PREMIER FOODS, you can compare the effects of market volatilities on United Rentals and PREMIER 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 PREMIER FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and PREMIER FOODS.
Diversification Opportunities for United Rentals and PREMIER FOODS
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and PREMIER is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS 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 PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of United Rentals i.e., United Rentals and PREMIER FOODS go up and down completely randomly.
Pair Corralation between United Rentals and PREMIER FOODS
Assuming the 90 days horizon United Rentals is expected to generate 1.76 times more return on investment than PREMIER FOODS. However, United Rentals is 1.76 times more volatile than PREMIER FOODS. It trades about 0.05 of its potential returns per unit of risk. PREMIER FOODS is currently generating about 0.08 per unit of risk. If you would invest 31,270 in United Rentals on January 21, 2025 and sell it today you would earn a total of 20,370 from holding United Rentals or generate 65.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. PREMIER FOODS
Performance |
| Timeline |
| United Rentals |
| PREMIER FOODS |
United Rentals and PREMIER FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and PREMIER FOODS
The main advantage of trading using opposite United Rentals and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, PREMIER 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 PREMIER FOODS will offset losses from the drop in PREMIER FOODS's long position.| United Rentals vs. PLAYTECH | United Rentals vs. SAN MIGUEL BREWERY | United Rentals vs. National Beverage Corp | United Rentals vs. BOSTON BEER A |
| PREMIER FOODS vs. Apple Inc | PREMIER FOODS vs. Apple Inc | PREMIER FOODS vs. Apple Inc | PREMIER FOODS vs. Apple Inc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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