Correlation Between United Rentals and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both United Rentals and RBC Bearings 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 RBC Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and RBC Bearings Incorporated, you can compare the effects of market volatilities on United Rentals and RBC Bearings 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 RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and RBC Bearings.
Diversification Opportunities for United Rentals and RBC Bearings
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and RBC is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings 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 RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings has no effect on the direction of United Rentals i.e., United Rentals and RBC Bearings go up and down completely randomly.
Pair Corralation between United Rentals and RBC Bearings
Considering the 90-day investment horizon United Rentals is expected to generate 1.38 times more return on investment than RBC Bearings. However, United Rentals is 1.38 times more volatile than RBC Bearings Incorporated. It trades about 0.11 of its potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.08 per unit of risk. If you would invest 38,363 in United Rentals on August 31, 2024 and sell it today you would earn a total of 48,237 from holding United Rentals or generate 125.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. RBC Bearings Incorporated
Performance |
| Timeline |
| United Rentals |
| RBC Bearings |
United Rentals and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and RBC Bearings
The main advantage of trading using opposite United Rentals and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, RBC Bearings 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 RBC Bearings will offset losses from the drop in RBC Bearings' long position.| United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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