Correlation Between United Rentals and CENTRICA ADR
Can any of the company-specific risk be diversified away by investing in both United Rentals and CENTRICA ADR 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 CENTRICA ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and CENTRICA ADR NEW, you can compare the effects of market volatilities on United Rentals and CENTRICA ADR 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 CENTRICA ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and CENTRICA ADR.
Diversification Opportunities for United Rentals and CENTRICA ADR
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and CENTRICA is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and CENTRICA ADR NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRICA ADR NEW 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 CENTRICA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTRICA ADR NEW has no effect on the direction of United Rentals i.e., United Rentals and CENTRICA ADR go up and down completely randomly.
Pair Corralation between United Rentals and CENTRICA ADR
Considering the 90-day investment horizon United Rentals is expected to generate 1.12 times more return on investment than CENTRICA ADR. However, United Rentals is 1.12 times more volatile than CENTRICA ADR NEW. It trades about 0.11 of its potential returns per unit of risk. CENTRICA ADR NEW is currently generating about -0.01 per unit of risk. If you would invest 49,060 in United Rentals on September 3, 2024 and sell it today you would earn a total of 37,540 from holding United Rentals or generate 76.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
United Rentals vs. CENTRICA ADR NEW
Performance |
| Timeline |
| United Rentals |
| CENTRICA ADR NEW |
United Rentals and CENTRICA ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and CENTRICA ADR
The main advantage of trading using opposite United Rentals and CENTRICA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, CENTRICA ADR 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 CENTRICA ADR will offset losses from the drop in CENTRICA ADR's long position.| United Rentals vs. Alta Equipment Group | United Rentals vs. McGrath RentCorp | United Rentals vs. Herc Holdings | United Rentals vs. HE Equipment Services |
| CENTRICA ADR vs. CeoTronics AG | CENTRICA ADR vs. MOLSON RS BEVERAGE | CENTRICA ADR vs. EPSILON HEALTHCARE LTD | CENTRICA ADR vs. Collins Foods Limited |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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