Correlation Between United Rentals and Park Ohio
Can any of the company-specific risk be diversified away by investing in both United Rentals and Park Ohio 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 Park Ohio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Park Ohio Holdings, you can compare the effects of market volatilities on United Rentals and Park Ohio 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 Park Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Park Ohio.
Diversification Opportunities for United Rentals and Park Ohio
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Park is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Park Ohio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Ohio Holdings 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 Park Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Ohio Holdings has no effect on the direction of United Rentals i.e., United Rentals and Park Ohio go up and down completely randomly.
Pair Corralation between United Rentals and Park Ohio
Considering the 90-day investment horizon United Rentals is expected to under-perform the Park Ohio. In addition to that, United Rentals is 1.18 times more volatile than Park Ohio Holdings. It trades about -0.25 of its total potential returns per unit of risk. Park Ohio Holdings is currently generating about -0.21 per unit of volatility. If you would invest 3,335 in Park Ohio Holdings on September 12, 2024 and sell it today you would lose (211.00) from holding Park Ohio Holdings or give up 6.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Park Ohio Holdings
Performance |
| Timeline |
| United Rentals |
| Park Ohio Holdings |
United Rentals and Park Ohio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Park Ohio
The main advantage of trading using opposite United Rentals and Park Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Park Ohio 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 Park Ohio will offset losses from the drop in Park Ohio'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 |
| Park Ohio vs. Hurco Companies | Park Ohio vs. Enerpac Tool Group | Park Ohio vs. China Yuchai International | Park Ohio vs. Luxfer Holdings PLC |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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