Correlation Between United Rentals and ZKB Silver

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Can any of the company-specific risk be diversified away by investing in both United Rentals and ZKB Silver 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 ZKB Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and ZKB Silver ETF, you can compare the effects of market volatilities on United Rentals and ZKB Silver 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 ZKB Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and ZKB Silver.

Diversification Opportunities for United Rentals and ZKB Silver

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between United and ZKB is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and ZKB Silver ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Silver ETF 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 ZKB Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Silver ETF has no effect on the direction of United Rentals i.e., United Rentals and ZKB Silver go up and down completely randomly.

Pair Corralation between United Rentals and ZKB Silver

Considering the 90-day investment horizon United Rentals is expected to generate 1.18 times more return on investment than ZKB Silver. However, United Rentals is 1.18 times more volatile than ZKB Silver ETF. It trades about 0.11 of its potential returns per unit of risk. ZKB Silver ETF is currently generating about 0.06 per unit of risk. If you would invest  50,059  in United Rentals on September 5, 2024 and sell it today you would earn a total of  36,765  from holding United Rentals or generate 73.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

United Rentals  vs.  ZKB Silver ETF

 Performance 
       Timeline  
United Rentals 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, United Rentals demonstrated solid returns over the last few months and may actually be approaching a breakup point.
ZKB Silver ETF 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in ZKB Silver ETF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal forward indicators, ZKB Silver may actually be approaching a critical reversion point that can send shares even higher in January 2025.

United Rentals and ZKB Silver Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Rentals and ZKB Silver

The main advantage of trading using opposite United Rentals and ZKB Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, ZKB Silver 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 ZKB Silver will offset losses from the drop in ZKB Silver's long position.
The idea behind United Rentals and ZKB Silver ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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