Correlation Between United Rentals and Lerøy Seafood
Can any of the company-specific risk be diversified away by investing in both United Rentals and Lerøy Seafood 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 Lerøy Seafood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Lery Seafood Group, you can compare the effects of market volatilities on United Rentals and Lerøy Seafood 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 Lerøy Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Lerøy Seafood.
Diversification Opportunities for United Rentals and Lerøy Seafood
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Lerøy is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Lery Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lery Seafood Group 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 Lerøy Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lery Seafood Group has no effect on the direction of United Rentals i.e., United Rentals and Lerøy Seafood go up and down completely randomly.
Pair Corralation between United Rentals and Lerøy Seafood
Considering the 90-day investment horizon United Rentals is expected to generate 4.7 times less return on investment than Lerøy Seafood. But when comparing it to its historical volatility, United Rentals is 4.52 times less risky than Lerøy Seafood. It trades about 0.09 of its potential returns per unit of risk. Lery Seafood Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 175.00 in Lery Seafood Group on September 3, 2024 and sell it today you would earn a total of 263.00 from holding Lery Seafood Group or generate 150.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.69% |
| Values | Daily Returns |
United Rentals vs. Lery Seafood Group
Performance |
| Timeline |
| United Rentals |
| Lery Seafood Group |
United Rentals and Lerøy Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Lerøy Seafood
The main advantage of trading using opposite United Rentals and Lerøy Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Lerøy Seafood 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 Lerøy Seafood will offset losses from the drop in Lerøy Seafood'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 |
| Lerøy Seafood vs. Nestl SA | Lerøy Seafood vs. Kraft Heinz Co | Lerøy Seafood vs. General Mills | Lerøy Seafood vs. Kellogg Company |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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