Correlation Between United Rentals and Unilever Indonesia
Can any of the company-specific risk be diversified away by investing in both United Rentals and Unilever Indonesia 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 Unilever Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Unilever Indonesia Tbk, you can compare the effects of market volatilities on United Rentals and Unilever Indonesia 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 Unilever Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Unilever Indonesia.
Diversification Opportunities for United Rentals and Unilever Indonesia
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Unilever is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Unilever Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever Indonesia Tbk 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 Unilever Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever Indonesia Tbk has no effect on the direction of United Rentals i.e., United Rentals and Unilever Indonesia go up and down completely randomly.
Pair Corralation between United Rentals and Unilever Indonesia
Considering the 90-day investment horizon United Rentals is expected to generate 0.84 times more return on investment than Unilever Indonesia. However, United Rentals is 1.19 times less risky than Unilever Indonesia. It trades about 0.2 of its potential returns per unit of risk. Unilever Indonesia Tbk is currently generating about 0.08 per unit of risk. If you would invest 78,451 in United Rentals on September 4, 2024 and sell it today you would earn a total of 8,451 from holding United Rentals or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Unilever Indonesia Tbk
Performance |
| Timeline |
| United Rentals |
| Unilever Indonesia Tbk |
United Rentals and Unilever Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Unilever Indonesia
The main advantage of trading using opposite United Rentals and Unilever Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Unilever Indonesia 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 Unilever Indonesia will offset losses from the drop in Unilever Indonesia'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 |
| Unilever Indonesia vs. Inter Parfums | Unilever Indonesia vs. European Wax Center | Unilever Indonesia vs. Spectrum Brands Holdings | Unilever Indonesia vs. Edgewell Personal Care |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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