Correlation Between United Rentals and Global Ship
Can any of the company-specific risk be diversified away by investing in both United Rentals and Global Ship 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 Global Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Global Ship Lease, you can compare the effects of market volatilities on United Rentals and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Global Ship.
Diversification Opportunities for United Rentals and Global Ship
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Global is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of United Rentals i.e., United Rentals and Global Ship go up and down completely randomly.
Pair Corralation between United Rentals and Global Ship
Considering the 90-day investment horizon United Rentals is expected to generate 2.78 times more return on investment than Global Ship. However, United Rentals is 2.78 times more volatile than Global Ship Lease. It trades about 0.07 of its potential returns per unit of risk. Global Ship Lease is currently generating about 0.05 per unit of risk. If you would invest 44,360 in United Rentals on August 27, 2024 and sell it today you would earn a total of 40,572 from holding United Rentals or generate 91.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Global Ship Lease
Performance |
| Timeline |
| United Rentals |
| Global Ship Lease |
United Rentals and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Global Ship
The main advantage of trading using opposite United Rentals and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship'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 |
| Global Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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