Correlation Between United Rentals and Ashley Services
Can any of the company-specific risk be diversified away by investing in both United Rentals and Ashley Services 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 Ashley Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Ashley Services Group, you can compare the effects of market volatilities on United Rentals and Ashley Services 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 Ashley Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Ashley Services.
Diversification Opportunities for United Rentals and Ashley Services
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Ashley is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Ashley Services Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashley Services Group 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 Ashley Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashley Services Group has no effect on the direction of United Rentals i.e., United Rentals and Ashley Services go up and down completely randomly.
Pair Corralation between United Rentals and Ashley Services
Considering the 90-day investment horizon United Rentals is expected to under-perform the Ashley Services. But the stock apears to be less risky and, when comparing its historical volatility, United Rentals is 4.42 times less risky than Ashley Services. The stock trades about -0.25 of its potential returns per unit of risk. The Ashley Services Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Ashley Services Group on September 12, 2024 and sell it today you would lose (2.00) from holding Ashley Services Group or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Rentals vs. Ashley Services Group
Performance |
| Timeline |
| United Rentals |
| Ashley Services Group |
United Rentals and Ashley Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Ashley Services
The main advantage of trading using opposite United Rentals and Ashley Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Ashley Services 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 Ashley Services will offset losses from the drop in Ashley Services' long position.| United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
| Ashley Services vs. Aussie Broadband | Ashley Services vs. Wt Financial Group | Ashley Services vs. Pioneer Credit | Ashley Services vs. National Australia Bank |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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