Correlation Between United Rentals and Newmont
Can any of the company-specific risk be diversified away by investing in both United Rentals and Newmont 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 Newmont into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Newmont, you can compare the effects of market volatilities on United Rentals and Newmont 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 Newmont. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Newmont.
Diversification Opportunities for United Rentals and Newmont
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Newmont is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of United Rentals i.e., United Rentals and Newmont go up and down completely randomly.
Pair Corralation between United Rentals and Newmont
Assuming the 90 days horizon United Rentals is expected to generate 1.05 times more return on investment than Newmont. However, United Rentals is 1.05 times more volatile than Newmont. It trades about 0.05 of its potential returns per unit of risk. Newmont is currently generating about 0.01 per unit of risk. If you would invest 56,977 in United Rentals on October 13, 2024 and sell it today you would earn a total of 9,043 from holding United Rentals or generate 15.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Newmont
Performance |
| Timeline |
| United Rentals |
| Newmont |
United Rentals and Newmont Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Newmont
The main advantage of trading using opposite United Rentals and Newmont positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Newmont 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 Newmont will offset losses from the drop in Newmont's long position.| United Rentals vs. PLAYTIKA HOLDING DL 01 | United Rentals vs. ARISTOCRAT LEISURE | United Rentals vs. USWE SPORTS AB | United Rentals vs. PennantPark Investment |
| Newmont vs. LOANDEPOT INC A | Newmont vs. Grupo Carso SAB | Newmont vs. NH HOTEL GROUP | Newmont vs. United Rentals |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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