Correlation Between United Rentals and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both United Rentals and Diamond Hill 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 Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Diamond Hill Small, you can compare the effects of market volatilities on United Rentals and Diamond Hill 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 Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Diamond Hill.
Diversification Opportunities for United Rentals and Diamond Hill
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and Diamond is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Diamond Hill Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Small 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Small has no effect on the direction of United Rentals i.e., United Rentals and Diamond Hill go up and down completely randomly.
Pair Corralation between United Rentals and Diamond Hill
Considering the 90-day investment horizon United Rentals is expected to generate 1.41 times more return on investment than Diamond Hill. However, United Rentals is 1.41 times more volatile than Diamond Hill Small. It trades about 0.09 of its potential returns per unit of risk. Diamond Hill Small is currently generating about 0.01 per unit of risk. If you would invest 35,864 in United Rentals on September 3, 2024 and sell it today you would earn a total of 50,736 from holding United Rentals or generate 141.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Diamond Hill Small
Performance |
| Timeline |
| United Rentals |
| Diamond Hill Small |
United Rentals and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Diamond Hill
The main advantage of trading using opposite United Rentals and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill'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 |
| Diamond Hill vs. Gmo High Yield | Diamond Hill vs. T Rowe Price | Diamond Hill vs. Metropolitan West High | Diamond Hill vs. Needham Aggressive Growth |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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