Correlation Between United Rentals and Massmutual Premier
Can any of the company-specific risk be diversified away by investing in both United Rentals and Massmutual Premier 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 Massmutual Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Massmutual Premier Disciplined, you can compare the effects of market volatilities on United Rentals and Massmutual Premier 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 Massmutual Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Massmutual Premier.
Diversification Opportunities for United Rentals and Massmutual Premier
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Massmutual is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Massmutual Premier Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Premier 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 Massmutual Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Premier has no effect on the direction of United Rentals i.e., United Rentals and Massmutual Premier go up and down completely randomly.
Pair Corralation between United Rentals and Massmutual Premier
Considering the 90-day investment horizon United Rentals is expected to generate 2.18 times more return on investment than Massmutual Premier. However, United Rentals is 2.18 times more volatile than Massmutual Premier Disciplined. It trades about 0.1 of its potential returns per unit of risk. Massmutual Premier Disciplined is currently generating about 0.19 per unit of risk. If you would invest 71,129 in United Rentals on September 12, 2024 and sell it today you would earn a total of 8,473 from holding United Rentals or generate 11.91% 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. Massmutual Premier Disciplined
Performance |
| Timeline |
| United Rentals |
| Massmutual Premier |
United Rentals and Massmutual Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Massmutual Premier
The main advantage of trading using opposite United Rentals and Massmutual Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Massmutual Premier 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 Massmutual Premier will offset losses from the drop in Massmutual Premier'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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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