Correlation Between United Rentals and Union Electric
Can any of the company-specific risk be diversified away by investing in both United Rentals and Union Electric 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 Union Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Union Electric, you can compare the effects of market volatilities on United Rentals and Union Electric 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 Union Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Union Electric.
Diversification Opportunities for United Rentals and Union Electric
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Union is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Union Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Electric 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 Union Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Electric has no effect on the direction of United Rentals i.e., United Rentals and Union Electric go up and down completely randomly.
Pair Corralation between United Rentals and Union Electric
If you would invest 6,500 in Union Electric on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Union Electric or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
United Rentals vs. Union Electric
Performance |
| Timeline |
| United Rentals |
| Union Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
United Rentals and Union Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Union Electric
The main advantage of trading using opposite United Rentals and Union Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Union Electric 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 Union Electric will offset losses from the drop in Union Electric'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 |
| Union Electric vs. IDACORP | Union Electric vs. Pinnacle West Capital | Union Electric vs. Portland General Electric | Union Electric vs. CMS Energy |
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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