Correlation Between United Rentals and Nine Dragons
Can any of the company-specific risk be diversified away by investing in both United Rentals and Nine Dragons 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 Nine Dragons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Nine Dragons Paper, you can compare the effects of market volatilities on United Rentals and Nine Dragons 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 Nine Dragons. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Nine Dragons.
Diversification Opportunities for United Rentals and Nine Dragons
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Nine is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Nine Dragons Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Dragons Paper 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 Nine Dragons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Dragons Paper has no effect on the direction of United Rentals i.e., United Rentals and Nine Dragons go up and down completely randomly.
Pair Corralation between United Rentals and Nine Dragons
Assuming the 90 days horizon United Rentals is expected to generate 1.47 times more return on investment than Nine Dragons. However, United Rentals is 1.47 times more volatile than Nine Dragons Paper. It trades about 0.13 of its potential returns per unit of risk. Nine Dragons Paper is currently generating about -0.13 per unit of risk. If you would invest 75,010 in United Rentals on August 29, 2024 and sell it today you would earn a total of 6,790 from holding United Rentals or generate 9.05% 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. Nine Dragons Paper
Performance |
| Timeline |
| United Rentals |
| Nine Dragons Paper |
United Rentals and Nine Dragons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Nine Dragons
The main advantage of trading using opposite United Rentals and Nine Dragons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Nine Dragons 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 Nine Dragons will offset losses from the drop in Nine Dragons' long position.| United Rentals vs. 24SEVENOFFICE GROUP AB | United Rentals vs. Corporate Office Properties | United Rentals vs. MTI WIRELESS EDGE | United Rentals vs. CITY OFFICE REIT |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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