Correlation Between United Rentals and ICICI Prudential

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Can any of the company-specific risk be diversified away by investing in both United Rentals and ICICI Prudential 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 ICICI Prudential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and ICICI Prudential Mutual, you can compare the effects of market volatilities on United Rentals and ICICI Prudential 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 ICICI Prudential. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and ICICI Prudential.

Diversification Opportunities for United Rentals and ICICI Prudential

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between United and ICICI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and ICICI Prudential Mutual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICICI Prudential Mutual 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 ICICI Prudential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICICI Prudential Mutual has no effect on the direction of United Rentals i.e., United Rentals and ICICI Prudential go up and down completely randomly.

Pair Corralation between United Rentals and ICICI Prudential

If you would invest  78,451  in United Rentals on September 4, 2024 and sell it today you would earn a total of  8,451  from holding United Rentals or generate 10.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.24%
ValuesDaily Returns

United Rentals  vs.  ICICI Prudential Mutual

 Performance 
       Timeline  
United Rentals 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, United Rentals demonstrated solid returns over the last few months and may actually be approaching a breakup point.
ICICI Prudential Mutual 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ICICI Prudential Mutual are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, ICICI Prudential displayed solid returns over the last few months and may actually be approaching a breakup point.

United Rentals and ICICI Prudential Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Rentals and ICICI Prudential

The main advantage of trading using opposite United Rentals and ICICI Prudential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, ICICI Prudential 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 ICICI Prudential will offset losses from the drop in ICICI Prudential's long position.
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The idea behind United Rentals and ICICI Prudential Mutual pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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