Correlation Between United Rentals and Kraft Heinz
Can any of the company-specific risk be diversified away by investing in both United Rentals and Kraft Heinz 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 Kraft Heinz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Kraft Heinz Co, you can compare the effects of market volatilities on United Rentals and Kraft Heinz 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 Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Kraft Heinz.
Diversification Opportunities for United Rentals and Kraft Heinz
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Kraft is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz 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 Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of United Rentals i.e., United Rentals and Kraft Heinz go up and down completely randomly.
Pair Corralation between United Rentals and Kraft Heinz
Assuming the 90 days horizon United Rentals is expected to generate 1.31 times more return on investment than Kraft Heinz. However, United Rentals is 1.31 times more volatile than Kraft Heinz Co. It trades about 0.27 of its potential returns per unit of risk. Kraft Heinz Co is currently generating about -0.11 per unit of risk. If you would invest 67,020 in United Rentals on November 4, 2024 and sell it today you would earn a total of 8,260 from holding United Rentals or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Kraft Heinz Co
Performance |
| Timeline |
| United Rentals |
| Kraft Heinz |
United Rentals and Kraft Heinz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Kraft Heinz
The main advantage of trading using opposite United Rentals and Kraft Heinz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Kraft Heinz 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 Kraft Heinz will offset losses from the drop in Kraft Heinz's long position.| United Rentals vs. GungHo Online Entertainment | United Rentals vs. Citic Telecom International | United Rentals vs. UNITED UTILITIES GR | United Rentals vs. CITIC Telecom International |
| Kraft Heinz vs. BRIT AMER TOBACCO | Kraft Heinz vs. Pembina Pipeline Corp | Kraft Heinz vs. Aegean Airlines SA | Kraft Heinz vs. Japan Tobacco |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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