Correlation Between United Rentals and Columbia Global
Can any of the company-specific risk be diversified away by investing in both United Rentals and Columbia Global 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 Columbia Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Columbia Global Opportunities, you can compare the effects of market volatilities on United Rentals and Columbia Global 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 Columbia Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Columbia Global.
Diversification Opportunities for United Rentals and Columbia Global
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Columbia is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Columbia Global Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Global Oppo 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 Columbia Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Global Oppo has no effect on the direction of United Rentals i.e., United Rentals and Columbia Global go up and down completely randomly.
Pair Corralation between United Rentals and Columbia Global
Considering the 90-day investment horizon United Rentals is expected to generate 3.77 times more return on investment than Columbia Global. However, United Rentals is 3.77 times more volatile than Columbia Global Opportunities. It trades about 0.12 of its potential returns per unit of risk. Columbia Global Opportunities is currently generating about 0.07 per unit of risk. If you would invest 64,070 in United Rentals on September 5, 2024 and sell it today you would earn a total of 22,832 from holding United Rentals or generate 35.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.0% |
| Values | Daily Returns |
United Rentals vs. Columbia Global Opportunities
Performance |
| Timeline |
| United Rentals |
| Columbia Global Oppo |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
United Rentals and Columbia Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Columbia Global
The main advantage of trading using opposite United Rentals and Columbia Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Columbia Global 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 Columbia Global will offset losses from the drop in Columbia Global'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 |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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