Correlation Between United Rentals and Wasatch Greater
Can any of the company-specific risk be diversified away by investing in both United Rentals and Wasatch Greater 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 Wasatch Greater into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Wasatch Greater China, you can compare the effects of market volatilities on United Rentals and Wasatch Greater 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 Wasatch Greater. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Wasatch Greater.
Diversification Opportunities for United Rentals and Wasatch Greater
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Wasatch is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Wasatch Greater China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Greater China 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 Wasatch Greater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Greater China has no effect on the direction of United Rentals i.e., United Rentals and Wasatch Greater go up and down completely randomly.
Pair Corralation between United Rentals and Wasatch Greater
Considering the 90-day investment horizon United Rentals is expected to generate 1.57 times more return on investment than Wasatch Greater. However, United Rentals is 1.57 times more volatile than Wasatch Greater China. It trades about 0.11 of its potential returns per unit of risk. Wasatch Greater China is currently generating about 0.0 per unit of risk. If you would invest 44,333 in United Rentals on September 4, 2024 and sell it today you would earn a total of 41,372 from holding United Rentals or generate 93.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.66% |
| Values | Daily Returns |
United Rentals vs. Wasatch Greater China
Performance |
| Timeline |
| United Rentals |
| Wasatch Greater China |
United Rentals and Wasatch Greater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Wasatch Greater
The main advantage of trading using opposite United Rentals and Wasatch Greater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Wasatch Greater 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 Wasatch Greater will offset losses from the drop in Wasatch Greater'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 |
| Wasatch Greater vs. Hennessy Bp Energy | Wasatch Greater vs. Icon Natural Resources | Wasatch Greater vs. Calvert Global Energy | Wasatch Greater vs. Adams Natural Resources |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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