Correlation Between United Rentals and Smith Douglas
Can any of the company-specific risk be diversified away by investing in both United Rentals and Smith Douglas 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 Smith Douglas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Smith Douglas Homes, you can compare the effects of market volatilities on United Rentals and Smith Douglas 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 Smith Douglas. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Smith Douglas.
Diversification Opportunities for United Rentals and Smith Douglas
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Smith is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Smith Douglas Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Douglas Homes 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 Smith Douglas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Douglas Homes has no effect on the direction of United Rentals i.e., United Rentals and Smith Douglas go up and down completely randomly.
Pair Corralation between United Rentals and Smith Douglas
Considering the 90-day investment horizon United Rentals is expected to generate 0.73 times more return on investment than Smith Douglas. However, United Rentals is 1.37 times less risky than Smith Douglas. It trades about 0.11 of its potential returns per unit of risk. Smith Douglas Homes is currently generating about -0.03 per unit of risk. If you would invest 82,310 in United Rentals on August 29, 2024 and sell it today you would earn a total of 5,007 from holding United Rentals or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Smith Douglas Homes
Performance |
| Timeline |
| United Rentals |
| Smith Douglas Homes |
United Rentals and Smith Douglas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Smith Douglas
The main advantage of trading using opposite United Rentals and Smith Douglas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Smith Douglas 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 Smith Douglas will offset losses from the drop in Smith Douglas' long position.| United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
| Smith Douglas vs. Nexstar Broadcasting Group | Smith Douglas vs. Hertz Global Holdings | Smith Douglas vs. First Ship Lease | Smith Douglas vs. United Rentals |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |