Correlation Between United Rentals and Sixt SE
Can any of the company-specific risk be diversified away by investing in both United Rentals and Sixt SE 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 Sixt SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Sixt SE, you can compare the effects of market volatilities on United Rentals and Sixt SE 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 Sixt SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Sixt SE.
Diversification Opportunities for United Rentals and Sixt SE
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Sixt is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Sixt SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixt SE 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 Sixt SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixt SE has no effect on the direction of United Rentals i.e., United Rentals and Sixt SE go up and down completely randomly.
Pair Corralation between United Rentals and Sixt SE
Assuming the 90 days horizon United Rentals is expected to generate 1.37 times more return on investment than Sixt SE. However, United Rentals is 1.37 times more volatile than Sixt SE. It trades about 0.1 of its potential returns per unit of risk. Sixt SE is currently generating about -0.09 per unit of risk. If you would invest 75,010 in United Rentals on August 27, 2024 and sell it today you would earn a total of 4,850 from holding United Rentals or generate 6.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Sixt SE
Performance |
| Timeline |
| United Rentals |
| Sixt SE |
United Rentals and Sixt SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Sixt SE
The main advantage of trading using opposite United Rentals and Sixt SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Sixt SE 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 Sixt SE will offset losses from the drop in Sixt SE's long position.| United Rentals vs. Superior Plus Corp | United Rentals vs. NMI Holdings | United Rentals vs. Origin Agritech | United Rentals vs. SIVERS SEMICONDUCTORS AB |
| Sixt SE vs. United Rentals | Sixt SE vs. Superior Plus Corp | Sixt SE vs. NMI Holdings | Sixt SE 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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