Correlation Between United Rentals and Franklin Strategic
Can any of the company-specific risk be diversified away by investing in both United Rentals and Franklin Strategic 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 Franklin Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Franklin Strategic Series, you can compare the effects of market volatilities on United Rentals and Franklin Strategic 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 Franklin Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Franklin Strategic.
Diversification Opportunities for United Rentals and Franklin Strategic
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Franklin is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Franklin Strategic Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Strategic Series 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 Franklin Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Strategic Series has no effect on the direction of United Rentals i.e., United Rentals and Franklin Strategic go up and down completely randomly.
Pair Corralation between United Rentals and Franklin Strategic
Considering the 90-day investment horizon United Rentals is expected to generate 13.74 times more return on investment than Franklin Strategic. However, United Rentals is 13.74 times more volatile than Franklin Strategic Series. It trades about 0.2 of its potential returns per unit of risk. Franklin Strategic Series is currently generating about -0.03 per unit of risk. If you would invest 78,451 in United Rentals on September 5, 2024 and sell it today you would earn a total of 8,451 from holding United Rentals or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Franklin Strategic Series
Performance |
| Timeline |
| United Rentals |
| Franklin Strategic Series |
United Rentals and Franklin Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Franklin Strategic
The main advantage of trading using opposite United Rentals and Franklin Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Franklin Strategic 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 Franklin Strategic will offset losses from the drop in Franklin Strategic'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 |
| Franklin Strategic vs. Franklin Mutual Beacon | Franklin Strategic vs. Templeton Developing Markets | Franklin Strategic vs. Franklin Mutual Global | Franklin Strategic vs. Franklin Mutual Global |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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