Correlation Between United Rentals and Cumberland Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both United Rentals and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Cumberland Pharmaceuticals, you can compare the effects of market volatilities on United Rentals and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Cumberland Pharmaceuticals.
Diversification Opportunities for United Rentals and Cumberland Pharmaceuticals
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Cumberland is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Cumberland Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumberland Pharmaceuticals has no effect on the direction of United Rentals i.e., United Rentals and Cumberland Pharmaceuticals go up and down completely randomly.
Pair Corralation between United Rentals and Cumberland Pharmaceuticals
Considering the 90-day investment horizon United Rentals is expected to generate 0.65 times more return on investment than Cumberland Pharmaceuticals. However, United Rentals is 1.54 times less risky than Cumberland Pharmaceuticals. It trades about 0.11 of its potential returns per unit of risk. Cumberland Pharmaceuticals is currently generating about -0.03 per unit of risk. If you would invest 47,193 in United Rentals on August 25, 2024 and sell it today you would earn a total of 37,739 from holding United Rentals or generate 79.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Cumberland Pharmaceuticals
Performance |
| Timeline |
| United Rentals |
| Cumberland Pharmaceuticals |
United Rentals and Cumberland Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Cumberland Pharmaceuticals
The main advantage of trading using opposite United Rentals and Cumberland Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals will offset losses from the drop in Cumberland Pharmaceuticals' long position.| United Rentals vs. PROG Holdings | United Rentals vs. McGrath RentCorp | United Rentals vs. Custom Truck One | United Rentals vs. Mega Matrix Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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