Correlation Between United States and United Rentals
Can any of the company-specific risk be diversified away by investing in both United States and United Rentals 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 States and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and United Rentals, you can compare the effects of market volatilities on United States and United Rentals 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 States with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and United Rentals.
Diversification Opportunities for United States and United Rentals
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and United is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and United States 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 States Steel are associated (or correlated) with United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of United States i.e., United States and United Rentals go up and down completely randomly.
Pair Corralation between United States and United Rentals
Assuming the 90 days trading horizon United States Steel is expected to generate 0.8 times more return on investment than United Rentals. However, United States Steel is 1.24 times less risky than United Rentals. It trades about -0.08 of its potential returns per unit of risk. United Rentals is currently generating about -0.1 per unit of risk. If you would invest 23,664 in United States Steel on September 12, 2024 and sell it today you would lose (996.00) from holding United States Steel or give up 4.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. United Rentals
Performance |
| Timeline |
| United States Steel |
| United Rentals |
United States and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and United Rentals
The main advantage of trading using opposite United States and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, United Rentals 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 United Rentals will offset losses from the drop in United Rentals' long position.| United States vs. Companhia Siderrgica Nacional | United States vs. Metalurgica Gerdau SA | United States vs. Metalurgica Gerdau SA | United States vs. Usinas Siderrgicas de |
| United Rentals vs. Localiza Rent a | United Rentals vs. Movida Participaes SA | United Rentals vs. Fundo Investimento Imobiliario | United Rentals vs. LESTE FDO INV |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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