Correlation Between United Rentals and Lucara Diamond
Can any of the company-specific risk be diversified away by investing in both United Rentals and Lucara Diamond 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 Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Lucara Diamond Corp, you can compare the effects of market volatilities on United Rentals and Lucara Diamond 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 Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Lucara Diamond.
Diversification Opportunities for United Rentals and Lucara Diamond
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Lucara is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Lucara Diamond Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucara Diamond Corp 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 Lucara Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucara Diamond Corp has no effect on the direction of United Rentals i.e., United Rentals and Lucara Diamond go up and down completely randomly.
Pair Corralation between United Rentals and Lucara Diamond
Considering the 90-day investment horizon United Rentals is expected to generate 0.51 times more return on investment than Lucara Diamond. However, United Rentals is 1.95 times less risky than Lucara Diamond. It trades about 0.07 of its potential returns per unit of risk. Lucara Diamond Corp is currently generating about 0.01 per unit of risk. If you would invest 45,048 in United Rentals on September 4, 2024 and sell it today you would earn a total of 40,657 from holding United Rentals or generate 90.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Lucara Diamond Corp
Performance |
| Timeline |
| United Rentals |
| Lucara Diamond Corp |
United Rentals and Lucara Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Lucara Diamond
The main advantage of trading using opposite United Rentals and Lucara Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Lucara Diamond 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 Lucara Diamond will offset losses from the drop in Lucara Diamond'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 |
| Lucara Diamond vs. Thunder Mountain Gold | Lucara Diamond vs. Gatos Silver | Lucara Diamond vs. Triple Flag Precious | Lucara Diamond vs. Libero Copper Gold |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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