Correlation Between United Rentals and Genus Plc
Can any of the company-specific risk be diversified away by investing in both United Rentals and Genus Plc 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 Genus Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Genus plc, you can compare the effects of market volatilities on United Rentals and Genus Plc 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 Genus Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Genus Plc.
Diversification Opportunities for United Rentals and Genus Plc
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Genus is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Genus plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genus plc 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 Genus Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genus plc has no effect on the direction of United Rentals i.e., United Rentals and Genus Plc go up and down completely randomly.
Pair Corralation between United Rentals and Genus Plc
Considering the 90-day investment horizon United Rentals is expected to generate 0.69 times more return on investment than Genus Plc. However, United Rentals is 1.45 times less risky than Genus Plc. It trades about -0.25 of its potential returns per unit of risk. Genus plc is currently generating about -0.24 per unit of risk. If you would invest 87,224 in United Rentals on September 12, 2024 and sell it today you would lose (7,527) from holding United Rentals or give up 8.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Rentals vs. Genus plc
Performance |
| Timeline |
| United Rentals |
| Genus plc |
United Rentals and Genus Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Genus Plc
The main advantage of trading using opposite United Rentals and Genus Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Genus Plc 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 Genus Plc will offset losses from the drop in Genus Plc'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 |
| Genus Plc vs. Marfrig Global Foods | Genus Plc vs. Aldel Financial II | Genus Plc vs. Sandstorm Gold Ltd | Genus Plc vs. Enersys |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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