Correlation Between United Rentals and E M
Can any of the company-specific risk be diversified away by investing in both United Rentals and E M 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 E M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and E M Computing, you can compare the effects of market volatilities on United Rentals and E M 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 E M. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and E M.
Diversification Opportunities for United Rentals and E M
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and EMCO is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and E M Computing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E M Computing 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 E M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E M Computing has no effect on the direction of United Rentals i.e., United Rentals and E M go up and down completely randomly.
Pair Corralation between United Rentals and E M
Considering the 90-day investment horizon United Rentals is expected to generate 1.23 times less return on investment than E M. In addition to that, United Rentals is 1.11 times more volatile than E M Computing. It trades about 0.17 of its total potential returns per unit of risk. E M Computing is currently generating about 0.24 per unit of volatility. If you would invest 81,800 in E M Computing on September 4, 2024 and sell it today you would earn a total of 8,200 from holding E M Computing or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
United Rentals vs. E M Computing
Performance |
| Timeline |
| United Rentals |
| E M Computing |
United Rentals and E M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and E M
The main advantage of trading using opposite United Rentals and E M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, E M 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 E M will offset losses from the drop in E M'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 |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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