Correlation Between TIMBERCREEK FINL and United Rentals

Can any of the company-specific risk be diversified away by investing in both TIMBERCREEK FINL 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 TIMBERCREEK FINL and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TIMBERCREEK FINL and United Rentals, you can compare the effects of market volatilities on TIMBERCREEK FINL 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 TIMBERCREEK FINL with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of TIMBERCREEK FINL and United Rentals.

Diversification Opportunities for TIMBERCREEK FINL and United Rentals

0.13

Correlation Coefficient

TIMBERCREEK FINL  United Rentals

Average diversification

The 3 months correlation between TIMBERCREEK and United is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding TIMBERCREEK FINL and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and TIMBERCREEK FINL 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 TIMBERCREEK FINL 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 TIMBERCREEK FINL i.e., TIMBERCREEK FINL and United Rentals go up and down completely randomly.

Pair Corralation between TIMBERCREEK FINL and United Rentals

Assuming the 90 days horizon TIMBERCREEK FINL is expected to under-perform the United Rentals. But the stock apears to be less risky and, when comparing its historical volatility, TIMBERCREEK FINL is 1.13 times less risky than United Rentals. The stock trades about -0.05 of its potential returns per unit of risk. The United Rentals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  71,377  in United Rentals on September 27, 2024 and sell it today you would lose (1,057) from holding United Rentals or give up 1.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TIMBERCREEK FINL  vs.  United Rentals

TIMBERCREEK FINL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TIMBERCREEK FINL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

United Rentals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Rentals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, United Rentals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TIMBERCREEK FINL and United Rentals

The main advantage of trading using opposite TIMBERCREEK FINL and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TIMBERCREEK FINL 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.

The idea behind TIMBERCREEK FINL and United Rentals 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.