Correlation Between United Rentals and Federated Bond
Can any of the company-specific risk be diversified away by investing in both United Rentals and Federated Bond 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 Federated Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Federated Bond Fund, you can compare the effects of market volatilities on United Rentals and Federated Bond 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 Federated Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Federated Bond.
Diversification Opportunities for United Rentals and Federated Bond
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Federated is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Federated Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Bond 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 Federated Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Bond has no effect on the direction of United Rentals i.e., United Rentals and Federated Bond go up and down completely randomly.
Pair Corralation between United Rentals and Federated Bond
Considering the 90-day investment horizon United Rentals is expected to generate 4.62 times more return on investment than Federated Bond. However, United Rentals is 4.62 times more volatile than Federated Bond Fund. It trades about 0.09 of its potential returns per unit of risk. Federated Bond Fund is currently generating about 0.04 per unit of risk. If you would invest 34,927 in United Rentals on September 5, 2024 and sell it today you would earn a total of 51,975 from holding United Rentals or generate 148.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Federated Bond Fund
Performance |
| Timeline |
| United Rentals |
| Federated Bond |
United Rentals and Federated Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Federated Bond
The main advantage of trading using opposite United Rentals and Federated Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Federated Bond 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 Federated Bond will offset losses from the drop in Federated Bond'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 |
| Federated Bond vs. Legg Mason Global | Federated Bond vs. Ab Global Real | Federated Bond vs. Siit Global Managed | Federated Bond vs. Barings Global Floating |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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