Correlation Between United Rentals and Smead International
Can any of the company-specific risk be diversified away by investing in both United Rentals and Smead International 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 Smead International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Smead International Value, you can compare the effects of market volatilities on United Rentals and Smead International 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 Smead International. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Smead International.
Diversification Opportunities for United Rentals and Smead International
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Smead is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Smead International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead International Value 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 Smead International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead International Value has no effect on the direction of United Rentals i.e., United Rentals and Smead International go up and down completely randomly.
Pair Corralation between United Rentals and Smead International
Considering the 90-day investment horizon United Rentals is expected to generate 1.99 times more return on investment than Smead International. However, United Rentals is 1.99 times more volatile than Smead International Value. It trades about 0.09 of its potential returns per unit of risk. Smead International Value is currently generating about 0.04 per unit of risk. If you would invest 35,864 in United Rentals on September 3, 2024 and sell it today you would earn a total of 50,736 from holding United Rentals or generate 141.47% 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. Smead International Value
Performance |
| Timeline |
| United Rentals |
| Smead International Value |
United Rentals and Smead International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Smead International
The main advantage of trading using opposite United Rentals and Smead International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Smead International 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 Smead International will offset losses from the drop in Smead International's long position.| United Rentals vs. Alta Equipment Group | United Rentals vs. McGrath RentCorp | United Rentals vs. Herc Holdings | United Rentals vs. HE Equipment Services |
| Smead International vs. Smead Value Fund | Smead International vs. Smead Value Fund | Smead International vs. Smead Value Fund | Smead International vs. Smead Value Fund |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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