Correlation Between United Rentals and Canadian National
Can any of the company-specific risk be diversified away by investing in both United Rentals and Canadian National 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 Canadian National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Canadian National Railway, you can compare the effects of market volatilities on United Rentals and Canadian National 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 Canadian National. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Canadian National.
Diversification Opportunities for United Rentals and Canadian National
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Canadian is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Canadian National Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian National Railway 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 Canadian National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian National Railway has no effect on the direction of United Rentals i.e., United Rentals and Canadian National go up and down completely randomly.
Pair Corralation between United Rentals and Canadian National
Considering the 90-day investment horizon United Rentals is expected to generate 1.58 times more return on investment than Canadian National. However, United Rentals is 1.58 times more volatile than Canadian National Railway. It trades about 0.12 of its potential returns per unit of risk. Canadian National Railway is currently generating about 0.05 per unit of risk. If you would invest 78,769 in United Rentals on September 3, 2024 and sell it today you would earn a total of 7,831 from holding United Rentals or generate 9.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
United Rentals vs. Canadian National Railway
Performance |
| Timeline |
| United Rentals |
| Canadian National Railway |
United Rentals and Canadian National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Canadian National
The main advantage of trading using opposite United Rentals and Canadian National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Canadian National 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 Canadian National will offset losses from the drop in Canadian National'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 |
| Canadian National vs. Superior Plus Corp | Canadian National vs. NMI Holdings | Canadian National vs. Origin Agritech | Canadian National vs. SIVERS SEMICONDUCTORS AB |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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