Correlation Between United Rentals and APx Acquisition
Can any of the company-specific risk be diversified away by investing in both United Rentals and APx Acquisition 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 APx Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and APx Acquisition I, you can compare the effects of market volatilities on United Rentals and APx Acquisition 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 APx Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and APx Acquisition.
Diversification Opportunities for United Rentals and APx Acquisition
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and APx is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and APx Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APx Acquisition I 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 APx Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APx Acquisition I has no effect on the direction of United Rentals i.e., United Rentals and APx Acquisition go up and down completely randomly.
Pair Corralation between United Rentals and APx Acquisition
Considering the 90-day investment horizon United Rentals is expected to under-perform the APx Acquisition. In addition to that, United Rentals is 1.43 times more volatile than APx Acquisition I. It trades about -0.22 of its total potential returns per unit of risk. APx Acquisition I is currently generating about 0.02 per unit of volatility. If you would invest 1,185 in APx Acquisition I on September 12, 2024 and sell it today you would earn a total of 3.00 from holding APx Acquisition I or generate 0.25% 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. APx Acquisition I
Performance |
| Timeline |
| United Rentals |
| APx Acquisition I |
United Rentals and APx Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and APx Acquisition
The main advantage of trading using opposite United Rentals and APx Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, APx Acquisition 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 APx Acquisition will offset losses from the drop in APx Acquisition'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 |
| APx Acquisition vs. HUMANA INC | APx Acquisition vs. Barloworld Ltd ADR | APx Acquisition vs. Morningstar Unconstrained Allocation | APx Acquisition vs. Thrivent High Yield |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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