Correlation Between Vulcan Energy and United Rentals
Can any of the company-specific risk be diversified away by investing in both Vulcan Energy 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 Vulcan Energy and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Energy Resources and United Rentals, you can compare the effects of market volatilities on Vulcan Energy 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 Vulcan Energy with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Energy and United Rentals.
Diversification Opportunities for Vulcan Energy and United Rentals
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vulcan and United is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Energy Resources and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Vulcan Energy 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 Vulcan Energy Resources 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 Vulcan Energy i.e., Vulcan Energy and United Rentals go up and down completely randomly.
Pair Corralation between Vulcan Energy and United Rentals
Assuming the 90 days trading horizon Vulcan Energy is expected to generate 3.87 times less return on investment than United Rentals. In addition to that, Vulcan Energy is 1.82 times more volatile than United Rentals. It trades about 0.01 of its total potential returns per unit of risk. United Rentals is currently generating about 0.06 per unit of volatility. If you would invest 35,742 in United Rentals on October 7, 2024 and sell it today you would earn a total of 31,278 from holding United Rentals or generate 87.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Vulcan Energy Resources vs. United Rentals
Performance |
| Timeline |
| Vulcan Energy Resources |
| United Rentals |
Vulcan Energy and United Rentals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Energy and United Rentals
The main advantage of trading using opposite Vulcan Energy and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Energy 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.| Vulcan Energy vs. TITANIUM TRANSPORTGROUP | Vulcan Energy vs. Lamar Advertising | Vulcan Energy vs. USWE SPORTS AB | Vulcan Energy vs. PARKEN Sport Entertainment |
| United Rentals vs. WillScot Mobile Mini | United Rentals vs. Superior Plus Corp | United Rentals vs. NMI Holdings | United Rentals vs. SIVERS SEMICONDUCTORS AB |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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