Correlation Between United Rentals and Vestis
Can any of the company-specific risk be diversified away by investing in both United Rentals and Vestis 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 Vestis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Vestis, you can compare the effects of market volatilities on United Rentals and Vestis 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 Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Vestis.
Diversification Opportunities for United Rentals and Vestis
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between United and Vestis is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of United Rentals i.e., United Rentals and Vestis go up and down completely randomly.
Pair Corralation between United Rentals and Vestis
Considering the 90-day investment horizon United Rentals is expected to generate 0.6 times more return on investment than Vestis. However, United Rentals is 1.66 times less risky than Vestis. It trades about 0.07 of its potential returns per unit of risk. Vestis is currently generating about 0.01 per unit of risk. If you would invest 44,360 in United Rentals on August 27, 2024 and sell it today you would earn a total of 40,572 from holding United Rentals or generate 91.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 64.62% |
| Values | Daily Returns |
United Rentals vs. Vestis
Performance |
| Timeline |
| United Rentals |
| Vestis |
United Rentals and Vestis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Vestis
The main advantage of trading using opposite United Rentals and Vestis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Vestis 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 Vestis will offset losses from the drop in Vestis' long position.| United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
| Vestis vs. PROG Holdings | Vestis vs. McGrath RentCorp | Vestis vs. Mega Matrix Corp | Vestis vs. FTAI Aviation Ltd |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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