Correlation Between United Rentals and Gladiator Metals
Can any of the company-specific risk be diversified away by investing in both United Rentals and Gladiator Metals 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 Gladiator Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Gladiator Metals Corp, you can compare the effects of market volatilities on United Rentals and Gladiator Metals 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 Gladiator Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Gladiator Metals.
Diversification Opportunities for United Rentals and Gladiator Metals
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Gladiator is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Gladiator Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladiator Metals Corp 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 Gladiator Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladiator Metals Corp has no effect on the direction of United Rentals i.e., United Rentals and Gladiator Metals go up and down completely randomly.
Pair Corralation between United Rentals and Gladiator Metals
Considering the 90-day investment horizon United Rentals is expected to generate 0.24 times more return on investment than Gladiator Metals. However, United Rentals is 4.18 times less risky than Gladiator Metals. It trades about -0.22 of its potential returns per unit of risk. Gladiator Metals Corp is currently generating about -0.13 per unit of risk. If you would invest 87,224 in United Rentals on September 12, 2024 and sell it today you would lose (6,964) from holding United Rentals or give up 7.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
United Rentals vs. Gladiator Metals Corp
Performance |
| Timeline |
| United Rentals |
| Gladiator Metals Corp |
United Rentals and Gladiator Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Gladiator Metals
The main advantage of trading using opposite United Rentals and Gladiator Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Gladiator Metals 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 Gladiator Metals will offset losses from the drop in Gladiator Metals' long position.| United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
| Gladiator Metals vs. Avarone Metals | Gladiator Metals vs. Huntsman Exploration | Gladiator Metals vs. Aurelia Metals Limited | Gladiator Metals vs. Adriatic Metals PLC |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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