Correlation Between United Rentals and Australian Agri
Can any of the company-specific risk be diversified away by investing in both United Rentals and Australian Agri 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 Australian Agri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Australian Agri Projects, you can compare the effects of market volatilities on United Rentals and Australian Agri 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 Australian Agri. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Australian Agri.
Diversification Opportunities for United Rentals and Australian Agri
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Australian is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Australian Agri Projects in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agri Projects 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 Australian Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agri Projects has no effect on the direction of United Rentals i.e., United Rentals and Australian Agri go up and down completely randomly.
Pair Corralation between United Rentals and Australian Agri
Considering the 90-day investment horizon United Rentals is expected to generate 2.84 times less return on investment than Australian Agri. But when comparing it to its historical volatility, United Rentals is 2.2 times less risky than Australian Agri. It trades about 0.05 of its potential returns per unit of risk. Australian Agri Projects is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1.60 in Australian Agri Projects on December 2, 2024 and sell it today you would earn a total of 3.30 from holding Australian Agri Projects or generate 206.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.0% |
| Values | Daily Returns |
United Rentals vs. Australian Agri Projects
Performance |
| Timeline |
| United Rentals |
| Australian Agri Projects |
United Rentals and Australian Agri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Australian Agri
The main advantage of trading using opposite United Rentals and Australian Agri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Australian Agri 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 Australian Agri will offset losses from the drop in Australian Agri'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 |
| Australian Agri vs. Argo Investments | Australian Agri vs. BKI Investment | Australian Agri vs. Carawine Resources Limited | Australian Agri vs. Hutchison Telecommunications |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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