Correlation Between United Rentals and Great West
Can any of the company-specific risk be diversified away by investing in both United Rentals and Great West 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 Great West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Great West E Strategies, you can compare the effects of market volatilities on United Rentals and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Great West.
Diversification Opportunities for United Rentals and Great West
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Great is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Great West E Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West E 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West E has no effect on the direction of United Rentals i.e., United Rentals and Great West go up and down completely randomly.
Pair Corralation between United Rentals and Great West
Considering the 90-day investment horizon United Rentals is expected to under-perform the Great West. In addition to that, United Rentals is 12.95 times more volatile than Great West E Strategies. It trades about -0.25 of its total potential returns per unit of risk. Great West E Strategies is currently generating about 0.3 per unit of volatility. If you would invest 374.00 in Great West E Strategies on September 12, 2024 and sell it today you would earn a total of 3.00 from holding Great West E Strategies or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Great West E Strategies
Performance |
| Timeline |
| United Rentals |
| Great West E |
United Rentals and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Great West
The main advantage of trading using opposite United Rentals and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West'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 |
| Great West vs. Absolute Convertible Arbitrage | Great West vs. Fidelity Sai Convertible | Great West vs. Lord Abbett Convertible | Great West vs. Rationalpier 88 Convertible |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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