Correlation Between United Rentals and Delta Electronics
Can any of the company-specific risk be diversified away by investing in both United Rentals and Delta Electronics 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 Delta Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Delta Electronics Public, you can compare the effects of market volatilities on United Rentals and Delta Electronics 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 Delta Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Delta Electronics.
Diversification Opportunities for United Rentals and Delta Electronics
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Delta is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Delta Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics Public 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 Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics Public has no effect on the direction of United Rentals i.e., United Rentals and Delta Electronics go up and down completely randomly.
Pair Corralation between United Rentals and Delta Electronics
Assuming the 90 days horizon United Rentals is expected to generate 0.6 times more return on investment than Delta Electronics. However, United Rentals is 1.65 times less risky than Delta Electronics. It trades about 0.25 of its potential returns per unit of risk. Delta Electronics Public is currently generating about -0.05 per unit of risk. If you would invest 68,120 in United Rentals on October 26, 2024 and sell it today you would earn a total of 6,540 from holding United Rentals or generate 9.6% 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. Delta Electronics Public
Performance |
| Timeline |
| United Rentals |
| Delta Electronics Public |
United Rentals and Delta Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Delta Electronics
The main advantage of trading using opposite United Rentals and Delta Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Delta Electronics 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 Delta Electronics will offset losses from the drop in Delta Electronics' long position.| United Rentals vs. SANOK RUBBER ZY | United Rentals vs. MUTUIONLINE | United Rentals vs. Hyster Yale Materials Handling | United Rentals vs. Salesforce |
| Delta Electronics vs. Harmony Gold Mining | Delta Electronics vs. STGEORGE MINING LTD | Delta Electronics vs. Marie Brizard Wine | Delta Electronics vs. De Grey Mining |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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