Correlation Between United Rentals and Citi Trends
Can any of the company-specific risk be diversified away by investing in both United Rentals and Citi Trends 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 Citi Trends into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Citi Trends, you can compare the effects of market volatilities on United Rentals and Citi Trends 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 Citi Trends. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Citi Trends.
Diversification Opportunities for United Rentals and Citi Trends
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Citi is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Citi Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citi Trends 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 Citi Trends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citi Trends has no effect on the direction of United Rentals i.e., United Rentals and Citi Trends go up and down completely randomly.
Pair Corralation between United Rentals and Citi Trends
Considering the 90-day investment horizon United Rentals is expected to generate 0.75 times more return on investment than Citi Trends. However, United Rentals is 1.33 times less risky than Citi Trends. It trades about 0.07 of its potential returns per unit of risk. Citi Trends is currently generating about 0.0 per unit of risk. If you would invest 41,925 in United Rentals on September 19, 2024 and sell it today you would earn a total of 33,914 from holding United Rentals or generate 80.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
United Rentals vs. Citi Trends
Performance |
Timeline |
United Rentals |
Citi Trends |
United Rentals and Citi Trends Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and Citi Trends
The main advantage of trading using opposite United Rentals and Citi Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Citi Trends 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 Citi Trends will offset losses from the drop in Citi Trends' long position.United Rentals vs. McGrath RentCorp | United Rentals vs. Custom Truck One | United Rentals vs. Alta Equipment Group | United Rentals vs. PROG Holdings |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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