Correlation Between United Rentals and Appen
Can any of the company-specific risk be diversified away by investing in both United Rentals and Appen 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 Appen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Appen, you can compare the effects of market volatilities on United Rentals and Appen 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 Appen. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Appen.
Diversification Opportunities for United Rentals and Appen
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Appen is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Appen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen 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 Appen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appen has no effect on the direction of United Rentals i.e., United Rentals and Appen go up and down completely randomly.
Pair Corralation between United Rentals and Appen
Considering the 90-day investment horizon United Rentals is expected to generate 3.72 times less return on investment than Appen. But when comparing it to its historical volatility, United Rentals is 2.85 times less risky than Appen. It trades about 0.1 of its potential returns per unit of risk. Appen is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Appen on September 12, 2024 and sell it today you would earn a total of 67.00 from holding Appen or generate 44.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
United Rentals vs. Appen
Performance |
| Timeline |
| United Rentals |
| Appen |
United Rentals and Appen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Appen
The main advantage of trading using opposite United Rentals and Appen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Appen 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 Appen will offset losses from the drop in Appen'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 |
| Appen vs. WiseTech Global Limited | Appen vs. Farm Pride Foods | Appen vs. MetalsGrove Mining | Appen vs. Black Rock Mining |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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