Correlation Between United Rentals and Knowles
Can any of the company-specific risk be diversified away by investing in both United Rentals and Knowles 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 Knowles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Knowles, you can compare the effects of market volatilities on United Rentals and Knowles 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 Knowles. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Knowles.
Diversification Opportunities for United Rentals and Knowles
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Knowles is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Knowles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles 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 Knowles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowles has no effect on the direction of United Rentals i.e., United Rentals and Knowles go up and down completely randomly.
Pair Corralation between United Rentals and Knowles
Considering the 90-day investment horizon United Rentals is expected to generate 1.65 times less return on investment than Knowles. In addition to that, United Rentals is 1.07 times more volatile than Knowles. It trades about 0.17 of its total potential returns per unit of risk. Knowles is currently generating about 0.31 per unit of volatility. If you would invest 1,600 in Knowles on September 4, 2024 and sell it today you would earn a total of 260.00 from holding Knowles or generate 16.25% 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. Knowles
Performance |
| Timeline |
| United Rentals |
| Knowles |
United Rentals and Knowles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Knowles
The main advantage of trading using opposite United Rentals and Knowles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Knowles 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 Knowles will offset losses from the drop in Knowles' long position.| United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
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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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