Correlation Between United Rentals and 254709AQ1

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Can any of the company-specific risk be diversified away by investing in both United Rentals and 254709AQ1 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 254709AQ1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and DFS 6125, you can compare the effects of market volatilities on United Rentals and 254709AQ1 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 254709AQ1. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and 254709AQ1.

Diversification Opportunities for United Rentals and 254709AQ1

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between United and 254709AQ1 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and DFS 6125 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 254709AQ1 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 254709AQ1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 254709AQ1 has no effect on the direction of United Rentals i.e., United Rentals and 254709AQ1 go up and down completely randomly.

Pair Corralation between United Rentals and 254709AQ1

Considering the 90-day investment horizon United Rentals is expected to generate 9.15 times more return on investment than 254709AQ1. However, United Rentals is 9.15 times more volatile than DFS 6125. It trades about 0.2 of its potential returns per unit of risk. DFS 6125 is currently generating about -0.12 per unit of risk. If you would invest  78,451  in United Rentals on September 3, 2024 and sell it today you would earn a total of  8,149  from holding United Rentals or generate 10.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.0%
ValuesDaily Returns

United Rentals  vs.  DFS 6125

 Performance 
       Timeline  
United Rentals 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, United Rentals demonstrated solid returns over the last few months and may actually be approaching a breakup point.
254709AQ1 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DFS 6125 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 254709AQ1 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

United Rentals and 254709AQ1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Rentals and 254709AQ1

The main advantage of trading using opposite United Rentals and 254709AQ1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, 254709AQ1 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 254709AQ1 will offset losses from the drop in 254709AQ1's long position.
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The idea behind United Rentals and DFS 6125 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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