Correlation Between United Rentals and Toro
Can any of the company-specific risk be diversified away by investing in both United Rentals and Toro 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 Toro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Toro Co, you can compare the effects of market volatilities on United Rentals and Toro 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 Toro. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Toro.
Diversification Opportunities for United Rentals and Toro
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Toro is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Toro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro 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 Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of United Rentals i.e., United Rentals and Toro go up and down completely randomly.
Pair Corralation between United Rentals and Toro
Considering the 90-day investment horizon United Rentals is expected to generate 1.09 times more return on investment than Toro. However, United Rentals is 1.09 times more volatile than Toro Co. It trades about 0.08 of its potential returns per unit of risk. Toro Co is currently generating about 0.0 per unit of risk. If you would invest 45,170 in United Rentals on September 12, 2024 and sell it today you would earn a total of 34,432 from holding United Rentals or generate 76.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.32% |
| Values | Daily Returns |
United Rentals vs. Toro Co
Performance |
| Timeline |
| United Rentals |
| Toro |
United Rentals and Toro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Toro
The main advantage of trading using opposite United Rentals and Toro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Toro 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 Toro will offset losses from the drop in Toro'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 |
| Toro vs. SEKISUI CHEMICAL | Toro vs. UNIVMUSIC GRPADR050 | Toro vs. PLAYMATES TOYS | Toro vs. Sanyo Chemical Industries |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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