Correlation Between United Rentals and GATX
Can any of the company-specific risk be diversified away by investing in both United Rentals and GATX 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 GATX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and GATX Corporation, you can compare the effects of market volatilities on United Rentals and GATX 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 GATX. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and GATX.
Diversification Opportunities for United Rentals and GATX
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and GATX is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and GATX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GATX 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 GATX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GATX has no effect on the direction of United Rentals i.e., United Rentals and GATX go up and down completely randomly.
Pair Corralation between United Rentals and GATX
Considering the 90-day investment horizon United Rentals is expected to generate 1.08 times less return on investment than GATX. In addition to that, United Rentals is 1.38 times more volatile than GATX Corporation. It trades about 0.06 of its total potential returns per unit of risk. GATX Corporation is currently generating about 0.09 per unit of volatility. If you would invest 12,574 in GATX Corporation on August 27, 2024 and sell it today you would earn a total of 3,585 from holding GATX Corporation or generate 28.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. GATX Corp.
Performance |
| Timeline |
| United Rentals |
| GATX |
United Rentals and GATX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and GATX
The main advantage of trading using opposite United Rentals and GATX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, GATX 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 GATX will offset losses from the drop in GATX'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 |
| GATX vs. Custom Truck One | GATX vs. HE Equipment Services | GATX vs. Alta Equipment Group | GATX vs. McGrath RentCorp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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