Correlation Between United Rentals and Neuberger Berman
Can any of the company-specific risk be diversified away by investing in both United Rentals and Neuberger Berman 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 Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Neuberger Berman Absolute, you can compare the effects of market volatilities on United Rentals and Neuberger Berman 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 Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Neuberger Berman.
Diversification Opportunities for United Rentals and Neuberger Berman
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Neuberger is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Neuberger Berman Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Absolute 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 Neuberger Berman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuberger Berman Absolute has no effect on the direction of United Rentals i.e., United Rentals and Neuberger Berman go up and down completely randomly.
Pair Corralation between United Rentals and Neuberger Berman
Considering the 90-day investment horizon United Rentals is expected to generate 7.54 times more return on investment than Neuberger Berman. However, United Rentals is 7.54 times more volatile than Neuberger Berman Absolute. It trades about 0.16 of its potential returns per unit of risk. Neuberger Berman Absolute is currently generating about 0.13 per unit of risk. If you would invest 66,581 in United Rentals on September 4, 2024 and sell it today you would earn a total of 19,124 from holding United Rentals or generate 28.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.82% |
| Values | Daily Returns |
United Rentals vs. Neuberger Berman Absolute
Performance |
| Timeline |
| United Rentals |
| Neuberger Berman Absolute |
United Rentals and Neuberger Berman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Neuberger Berman
The main advantage of trading using opposite United Rentals and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Neuberger Berman 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 Neuberger Berman will offset losses from the drop in Neuberger Berman'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 |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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