Correlation Between United Rentals and KION GROUP
Can any of the company-specific risk be diversified away by investing in both United Rentals and KION GROUP 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 KION GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and KION GROUP AG, you can compare the effects of market volatilities on United Rentals and KION GROUP 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 KION GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and KION GROUP.
Diversification Opportunities for United Rentals and KION GROUP
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and KION is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and KION GROUP AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KION GROUP AG 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 KION GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KION GROUP AG has no effect on the direction of United Rentals i.e., United Rentals and KION GROUP go up and down completely randomly.
Pair Corralation between United Rentals and KION GROUP
Considering the 90-day investment horizon United Rentals is expected to generate 0.64 times more return on investment than KION GROUP. However, United Rentals is 1.55 times less risky than KION GROUP. It trades about 0.09 of its potential returns per unit of risk. KION GROUP AG is currently generating about 0.04 per unit of risk. If you would invest 35,974 in United Rentals on September 4, 2024 and sell it today you would earn a total of 49,731 from holding United Rentals or generate 138.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.03% |
| Values | Daily Returns |
United Rentals vs. KION GROUP AG
Performance |
| Timeline |
| United Rentals |
| KION GROUP AG |
United Rentals and KION GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and KION GROUP
The main advantage of trading using opposite United Rentals and KION GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, KION GROUP 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 KION GROUP will offset losses from the drop in KION GROUP'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 |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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