Correlation Between United Rentals and GEELY AUTOMOBILE
Can any of the company-specific risk be diversified away by investing in both United Rentals and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and GEELY AUTOMOBILE, you can compare the effects of market volatilities on United Rentals and GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and GEELY AUTOMOBILE.
Diversification Opportunities for United Rentals and GEELY AUTOMOBILE
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and GEELY is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and GEELY AUTOMOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEELY AUTOMOBILE 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 GEELY AUTOMOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEELY AUTOMOBILE has no effect on the direction of United Rentals i.e., United Rentals and GEELY AUTOMOBILE go up and down completely randomly.
Pair Corralation between United Rentals and GEELY AUTOMOBILE
Assuming the 90 days horizon United Rentals is expected to generate 2.4 times less return on investment than GEELY AUTOMOBILE. But when comparing it to its historical volatility, United Rentals is 1.48 times less risky than GEELY AUTOMOBILE. It trades about 0.14 of its potential returns per unit of risk. GEELY AUTOMOBILE is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 101.00 in GEELY AUTOMOBILE on August 31, 2024 and sell it today you would earn a total of 66.00 from holding GEELY AUTOMOBILE or generate 65.35% 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. GEELY AUTOMOBILE
Performance |
| Timeline |
| United Rentals |
| GEELY AUTOMOBILE |
United Rentals and GEELY AUTOMOBILE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and GEELY AUTOMOBILE
The main advantage of trading using opposite United Rentals and GEELY AUTOMOBILE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, GEELY AUTOMOBILE 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 GEELY AUTOMOBILE will offset losses from the drop in GEELY AUTOMOBILE's long position.| United Rentals vs. FUYO GENERAL LEASE | United Rentals vs. Sumitomo Chemical | United Rentals vs. TIANDE CHEMICAL | United Rentals vs. Sanyo Chemical Industries |
| GEELY AUTOMOBILE vs. SIVERS SEMICONDUCTORS AB | GEELY AUTOMOBILE vs. Darden Restaurants | GEELY AUTOMOBILE vs. Reliance Steel Aluminum | GEELY AUTOMOBILE vs. Q2M Managementberatung AG |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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