Correlation Between United Rentals and Big Tree
Can any of the company-specific risk be diversified away by investing in both United Rentals and Big Tree 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 Big Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Big Tree Cloud, you can compare the effects of market volatilities on United Rentals and Big Tree 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 Big Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Big Tree.
Diversification Opportunities for United Rentals and Big Tree
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Big is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Big Tree Cloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Tree Cloud 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 Big Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Tree Cloud has no effect on the direction of United Rentals i.e., United Rentals and Big Tree go up and down completely randomly.
Pair Corralation between United Rentals and Big Tree
Considering the 90-day investment horizon United Rentals is expected to under-perform the Big Tree. But the stock apears to be less risky and, when comparing its historical volatility, United Rentals is 5.24 times less risky than Big Tree. The stock trades about -0.39 of its potential returns per unit of risk. The Big Tree Cloud is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2.61 in Big Tree Cloud on November 29, 2024 and sell it today you would earn a total of 0.11 from holding Big Tree Cloud or generate 4.21% 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. Big Tree Cloud
Performance |
| Timeline |
| United Rentals |
| Big Tree Cloud |
United Rentals and Big Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Big Tree
The main advantage of trading using opposite United Rentals and Big Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Big Tree 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 Big Tree will offset losses from the drop in Big Tree'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 |
| Big Tree vs. SunOpta | Big Tree vs. Albertsons Companies | Big Tree vs. Bilibili | Big Tree vs. WK Kellogg Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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