Correlation Between United Rentals and Compagnie
Can any of the company-specific risk be diversified away by investing in both United Rentals and Compagnie 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 Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Compagnie Du Mont Blanc, you can compare the effects of market volatilities on United Rentals and Compagnie 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 Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Compagnie.
Diversification Opportunities for United Rentals and Compagnie
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Compagnie is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Compagnie Du Mont Blanc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Du Mont 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Du Mont has no effect on the direction of United Rentals i.e., United Rentals and Compagnie go up and down completely randomly.
Pair Corralation between United Rentals and Compagnie
Considering the 90-day investment horizon United Rentals is expected to generate 1.54 times more return on investment than Compagnie. However, United Rentals is 1.54 times more volatile than Compagnie Du Mont Blanc. It trades about 0.17 of its potential returns per unit of risk. Compagnie Du Mont Blanc is currently generating about 0.09 per unit of risk. If you would invest 78,451 in United Rentals on September 4, 2024 and sell it today you would earn a total of 7,254 from holding United Rentals or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Compagnie Du Mont Blanc
Performance |
| Timeline |
| United Rentals |
| Compagnie Du Mont |
United Rentals and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Compagnie
The main advantage of trading using opposite United Rentals and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie'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 |
| Compagnie vs. Trigano SA | Compagnie vs. SA Catana Group | Compagnie vs. Fountaine Pajo | Compagnie vs. Piscines Desjoyaux 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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