Correlation Between United Rentals and Citi Trends

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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 Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

United Rentals  vs.  Citi Trends

 Performance 
       Timeline  
United Rentals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days United Rentals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, United Rentals is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.
Citi Trends 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Citi Trends are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Citi Trends displayed solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind United Rentals and Citi Trends pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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