Correlation Between United Rentals and Stanley Electric
Can any of the company-specific risk be diversified away by investing in both United Rentals and Stanley Electric 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 Stanley Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Stanley Electric Co, you can compare the effects of market volatilities on United Rentals and Stanley Electric 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 Stanley Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Stanley Electric.
Diversification Opportunities for United Rentals and Stanley Electric
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Stanley is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Stanley Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stanley Electric 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 Stanley Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stanley Electric has no effect on the direction of United Rentals i.e., United Rentals and Stanley Electric go up and down completely randomly.
Pair Corralation between United Rentals and Stanley Electric
Assuming the 90 days horizon United Rentals is expected to generate 1.48 times more return on investment than Stanley Electric. However, United Rentals is 1.48 times more volatile than Stanley Electric Co. It trades about 0.02 of its potential returns per unit of risk. Stanley Electric Co is currently generating about -0.02 per unit of risk. If you would invest 67,668 in United Rentals on September 21, 2024 and sell it today you would earn a total of 1,712 from holding United Rentals or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Stanley Electric Co
Performance |
| Timeline |
| United Rentals |
| Stanley Electric |
United Rentals and Stanley Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Stanley Electric
The main advantage of trading using opposite United Rentals and Stanley Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Stanley Electric 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 Stanley Electric will offset losses from the drop in Stanley Electric's long position.| United Rentals vs. USWE SPORTS AB | United Rentals vs. Altair Engineering | United Rentals vs. Air Transport Services | United Rentals vs. LAir Liquide SA |
| Stanley Electric vs. FUYO GENERAL LEASE | Stanley Electric vs. RETAIL FOOD GROUP | Stanley Electric vs. PICKN PAY STORES | Stanley Electric 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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