Correlation Between United Rentals and Columbia Thermostat
Can any of the company-specific risk be diversified away by investing in both United Rentals and Columbia Thermostat 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 Thermostat 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 Thermostat Fund, you can compare the effects of market volatilities on United Rentals and Columbia Thermostat 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 Thermostat. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Columbia Thermostat.
Diversification Opportunities for United Rentals and Columbia Thermostat
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Columbia is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Columbia Thermostat Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Thermostat 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 Thermostat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Thermostat has no effect on the direction of United Rentals i.e., United Rentals and Columbia Thermostat go up and down completely randomly.
Pair Corralation between United Rentals and Columbia Thermostat
Considering the 90-day investment horizon United Rentals is expected to generate 5.37 times more return on investment than Columbia Thermostat. However, United Rentals is 5.37 times more volatile than Columbia Thermostat Fund. It trades about 0.08 of its potential returns per unit of risk. Columbia Thermostat Fund is currently generating about 0.1 per unit of risk. If you would invest 45,170 in United Rentals on September 12, 2024 and sell it today you would earn a total of 34,432 from holding United Rentals or generate 76.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Columbia Thermostat Fund
Performance |
| Timeline |
| United Rentals |
| Columbia Thermostat |
United Rentals and Columbia Thermostat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Columbia Thermostat
The main advantage of trading using opposite United Rentals and Columbia Thermostat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Columbia Thermostat 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 Thermostat will offset losses from the drop in Columbia Thermostat'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 |
| Columbia Thermostat vs. Columbia Thermostat Fund | Columbia Thermostat vs. Columbia Income Builder | Columbia Thermostat vs. Columbia Balanced Fund |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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