Correlation Between United Rentals and WashTec AG
Can any of the company-specific risk be diversified away by investing in both United Rentals and WashTec AG 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 WashTec AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and WashTec AG, you can compare the effects of market volatilities on United Rentals and WashTec AG 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 WashTec AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and WashTec AG.
Diversification Opportunities for United Rentals and WashTec AG
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and WashTec is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and WashTec AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WashTec AG 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 WashTec AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WashTec AG has no effect on the direction of United Rentals i.e., United Rentals and WashTec AG go up and down completely randomly.
Pair Corralation between United Rentals and WashTec AG
Considering the 90-day investment horizon United Rentals is expected to generate 2.56 times less return on investment than WashTec AG. But when comparing it to its historical volatility, United Rentals is 1.33 times less risky than WashTec AG. It trades about 0.2 of its potential returns per unit of risk. WashTec AG is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 318.00 in WashTec AG on September 3, 2024 and sell it today you would earn a total of 93.00 from holding WashTec AG or generate 29.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. WashTec AG
Performance |
| Timeline |
| United Rentals |
| WashTec AG |
United Rentals and WashTec AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and WashTec AG
The main advantage of trading using opposite United Rentals and WashTec AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, WashTec AG 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 WashTec AG will offset losses from the drop in WashTec AG's long position.| United Rentals vs. Alta Equipment Group | United Rentals vs. McGrath RentCorp | United Rentals vs. Herc Holdings | United Rentals vs. HE Equipment Services |
| WashTec AG vs. Ramsay Health Care | WashTec AG vs. Medical Facilities | WashTec AG vs. Jack Nathan Medical | WashTec AG vs. Fresenius SE Co |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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