Correlation Between United Rentals and Universal
Can any of the company-specific risk be diversified away by investing in both United Rentals and Universal 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 Universal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Universal, you can compare the effects of market volatilities on United Rentals and Universal 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 Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Universal.
Diversification Opportunities for United Rentals and Universal
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Universal is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of United Rentals i.e., United Rentals and Universal go up and down completely randomly.
Pair Corralation between United Rentals and Universal
Considering the 90-day investment horizon United Rentals is expected to generate 1.31 times more return on investment than Universal. However, United Rentals is 1.31 times more volatile than Universal. It trades about 0.1 of its potential returns per unit of risk. Universal is currently generating about 0.06 per unit of risk. If you would invest 46,481 in United Rentals on August 29, 2024 and sell it today you would earn a total of 39,217 from holding United Rentals or generate 84.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Universal
Performance |
| Timeline |
| United Rentals |
| Universal |
United Rentals and Universal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Universal
The main advantage of trading using opposite United Rentals and Universal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Universal 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 Universal will offset losses from the drop in Universal'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 |
| Universal vs. Imperial Brands PLC | Universal vs. Japan Tobacco ADR | Universal vs. Philip Morris International | Universal vs. Turning Point Brands |
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 CEOs Directory module to screen CEOs from public companies around the world.
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