Correlation Between United Rentals and Gmo International
Can any of the company-specific risk be diversified away by investing in both United Rentals and Gmo International 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 Gmo International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Gmo International Equity, you can compare the effects of market volatilities on United Rentals and Gmo International 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 Gmo International. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Gmo International.
Diversification Opportunities for United Rentals and Gmo International
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Gmo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Gmo International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo International Equity 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 Gmo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo International Equity has no effect on the direction of United Rentals i.e., United Rentals and Gmo International go up and down completely randomly.
Pair Corralation between United Rentals and Gmo International
Considering the 90-day investment horizon United Rentals is expected to generate 2.69 times more return on investment than Gmo International. However, United Rentals is 2.69 times more volatile than Gmo International Equity. It trades about 0.07 of its potential returns per unit of risk. Gmo International Equity is currently generating about 0.07 per unit of risk. If you would invest 56,311 in United Rentals on September 12, 2024 and sell it today you would earn a total of 23,291 from holding United Rentals or generate 41.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
United Rentals vs. Gmo International Equity
Performance |
| Timeline |
| United Rentals |
| Gmo International Equity |
United Rentals and Gmo International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Gmo International
The main advantage of trading using opposite United Rentals and Gmo International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Gmo International 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 Gmo International will offset losses from the drop in Gmo International'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 |
| Gmo International vs. Oakmark International Fund | Gmo International vs. Dodge International Stock | Gmo International vs. Oakmark International Fund | Gmo International vs. Oakmark International Fund |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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