Correlation Between United Rentals and Thornburg Low
Can any of the company-specific risk be diversified away by investing in both United Rentals and Thornburg Low 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 Thornburg Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Thornburg Low Duration, you can compare the effects of market volatilities on United Rentals and Thornburg Low 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 Thornburg Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Thornburg Low.
Diversification Opportunities for United Rentals and Thornburg Low
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Thornburg is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Thornburg Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Low Duration 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 Thornburg Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Low Duration has no effect on the direction of United Rentals i.e., United Rentals and Thornburg Low go up and down completely randomly.
Pair Corralation between United Rentals and Thornburg Low
Considering the 90-day investment horizon United Rentals is expected to generate 21.75 times more return on investment than Thornburg Low. However, United Rentals is 21.75 times more volatile than Thornburg Low Duration. It trades about 0.16 of its potential returns per unit of risk. Thornburg Low Duration is currently generating about 0.17 per unit of risk. If you would invest 66,581 in United Rentals on September 4, 2024 and sell it today you would earn a total of 19,124 from holding United Rentals or generate 28.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.82% |
| Values | Daily Returns |
United Rentals vs. Thornburg Low Duration
Performance |
| Timeline |
| United Rentals |
| Thornburg Low Duration |
United Rentals and Thornburg Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Thornburg Low
The main advantage of trading using opposite United Rentals and Thornburg Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Thornburg Low 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 Thornburg Low will offset losses from the drop in Thornburg Low'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 |
| Thornburg Low vs. Thornburg Value Fund | Thornburg Low vs. Thornburg Value Fund | Thornburg Low vs. Thornburg International Value | Thornburg Low vs. Thornburg International Value |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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