Correlation Between United Rentals and RaemongRaein
Can any of the company-specific risk be diversified away by investing in both United Rentals and RaemongRaein 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 RaemongRaein into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and RaemongRaein Co, you can compare the effects of market volatilities on United Rentals and RaemongRaein 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 RaemongRaein. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and RaemongRaein.
Diversification Opportunities for United Rentals and RaemongRaein
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and RaemongRaein is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and RaemongRaein Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RaemongRaein 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 RaemongRaein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RaemongRaein has no effect on the direction of United Rentals i.e., United Rentals and RaemongRaein go up and down completely randomly.
Pair Corralation between United Rentals and RaemongRaein
Considering the 90-day investment horizon United Rentals is expected to generate 0.53 times more return on investment than RaemongRaein. However, United Rentals is 1.89 times less risky than RaemongRaein. It trades about 0.19 of its potential returns per unit of risk. RaemongRaein Co is currently generating about -0.05 per unit of risk. If you would invest 78,451 in United Rentals on September 5, 2024 and sell it today you would earn a total of 8,373 from holding United Rentals or generate 10.67% 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. RaemongRaein Co
Performance |
| Timeline |
| United Rentals |
| RaemongRaein |
United Rentals and RaemongRaein Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and RaemongRaein
The main advantage of trading using opposite United Rentals and RaemongRaein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, RaemongRaein 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 RaemongRaein will offset losses from the drop in RaemongRaein's long position.| United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
| RaemongRaein vs. Ssangyong Materials Corp | RaemongRaein vs. RF Materials Co | RaemongRaein vs. TOPMATERIAL LTD | RaemongRaein vs. Hyosung Advanced Materials |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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