Correlation Between United Rentals and National Bank
Can any of the company-specific risk be diversified away by investing in both United Rentals and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and National Bank Holdings, you can compare the effects of market volatilities on United Rentals and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and National Bank.
Diversification Opportunities for United Rentals and National Bank
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and National is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of United Rentals i.e., United Rentals and National Bank go up and down completely randomly.
Pair Corralation between United Rentals and National Bank
Assuming the 90 days horizon United Rentals is expected to generate 1.09 times more return on investment than National Bank. However, United Rentals is 1.09 times more volatile than National Bank Holdings. It trades about 0.08 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.03 per unit of risk. If you would invest 34,821 in United Rentals on August 31, 2024 and sell it today you would earn a total of 47,079 from holding United Rentals or generate 135.2% 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. National Bank Holdings
Performance |
| Timeline |
| United Rentals |
| National Bank Holdings |
United Rentals and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and National Bank
The main advantage of trading using opposite United Rentals and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank'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 |
| National Bank vs. Fifth Third Bancorp | National Bank vs. Regions Financial | National Bank vs. Superior Plus Corp | National Bank vs. Origin Agritech |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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