Correlation Between United Rentals and PepsiCo
Can any of the company-specific risk be diversified away by investing in both United Rentals and PepsiCo 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 PepsiCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and PepsiCo, you can compare the effects of market volatilities on United Rentals and PepsiCo 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 PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and PepsiCo.
Diversification Opportunities for United Rentals and PepsiCo
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and PepsiCo is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo 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 PepsiCo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PepsiCo has no effect on the direction of United Rentals i.e., United Rentals and PepsiCo go up and down completely randomly.
Pair Corralation between United Rentals and PepsiCo
Considering the 90-day investment horizon United Rentals is expected to generate 2.29 times more return on investment than PepsiCo. However, United Rentals is 2.29 times more volatile than PepsiCo. It trades about 0.13 of its potential returns per unit of risk. PepsiCo is currently generating about -0.06 per unit of risk. If you would invest 81,127 in United Rentals on September 1, 2024 and sell it today you would earn a total of 5,473 from holding United Rentals or generate 6.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. PepsiCo
Performance |
| Timeline |
| United Rentals |
| PepsiCo |
United Rentals and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and PepsiCo
The main advantage of trading using opposite United Rentals and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, PepsiCo 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 PepsiCo will offset losses from the drop in PepsiCo'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 |
| PepsiCo vs. Coca Cola Femsa SAB | PepsiCo vs. National Beverage Corp | PepsiCo vs. Embotelladora Andina 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Stocks Directory Find actively traded stocks across global markets |