Correlation Between United Rentals and Localiza Rent
Can any of the company-specific risk be diversified away by investing in both United Rentals and Localiza Rent 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 Localiza Rent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Localiza Rent A, you can compare the effects of market volatilities on United Rentals and Localiza Rent 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 Localiza Rent. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Localiza Rent.
Diversification Opportunities for United Rentals and Localiza Rent
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and Localiza is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Localiza Rent A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Localiza Rent A 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 Localiza Rent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Localiza Rent A has no effect on the direction of United Rentals i.e., United Rentals and Localiza Rent go up and down completely randomly.
Pair Corralation between United Rentals and Localiza Rent
Considering the 90-day investment horizon United Rentals is expected to generate 0.88 times more return on investment than Localiza Rent. However, United Rentals is 1.13 times less risky than Localiza Rent. It trades about 0.1 of its potential returns per unit of risk. Localiza Rent A is currently generating about 0.04 per unit of risk. If you would invest 82,310 in United Rentals on August 28, 2024 and sell it today you would earn a total of 4,129 from holding United Rentals or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
United Rentals vs. Localiza Rent A
Performance |
| Timeline |
| United Rentals |
| Localiza Rent A |
United Rentals and Localiza Rent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Localiza Rent
The main advantage of trading using opposite United Rentals and Localiza Rent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Localiza Rent 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 Localiza Rent will offset losses from the drop in Localiza Rent's long position.| United Rentals vs. PROG Holdings | United Rentals vs. McGrath RentCorp | United Rentals vs. Mega Matrix Corp | United Rentals vs. FTAI Aviation Ltd |
| Localiza Rent vs. Hypera SA | Localiza Rent vs. Raia Drogasil SA | Localiza Rent vs. BB Seguridade Participacoes | Localiza Rent vs. Equatorial Energia SA |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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