Correlation Between United Rentals and KUBOTA P
Can any of the company-specific risk be diversified away by investing in both United Rentals and KUBOTA P 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 KUBOTA P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and KUBOTA P ADR20, you can compare the effects of market volatilities on United Rentals and KUBOTA P 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 KUBOTA P. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and KUBOTA P.
Diversification Opportunities for United Rentals and KUBOTA P
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and KUBOTA is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and KUBOTA P ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KUBOTA P ADR20 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 KUBOTA P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KUBOTA P ADR20 has no effect on the direction of United Rentals i.e., United Rentals and KUBOTA P go up and down completely randomly.
Pair Corralation between United Rentals and KUBOTA P
Assuming the 90 days horizon United Rentals is expected to generate 1.69 times more return on investment than KUBOTA P. However, United Rentals is 1.69 times more volatile than KUBOTA P ADR20. It trades about 0.31 of its potential returns per unit of risk. KUBOTA P ADR20 is currently generating about 0.14 per unit of risk. If you would invest 68,120 in United Rentals on October 25, 2024 and sell it today you would earn a total of 7,420 from holding United Rentals or generate 10.89% 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. KUBOTA P ADR20
Performance |
| Timeline |
| United Rentals |
| KUBOTA P ADR20 |
United Rentals and KUBOTA P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and KUBOTA P
The main advantage of trading using opposite United Rentals and KUBOTA P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, KUBOTA P 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 KUBOTA P will offset losses from the drop in KUBOTA P's long position.| United Rentals vs. Information Services International Dentsu | United Rentals vs. BURLINGTON STORES | United Rentals vs. Stewart Information Services | United Rentals vs. SPARTAN STORES |
| KUBOTA P vs. Teradata Corp | KUBOTA P vs. CN DATANG C | KUBOTA P vs. Playa Hotels Resorts | KUBOTA P vs. PLAYMATES TOYS |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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