Correlation Between SCIENCE IN and United Rentals

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

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

Diversification Opportunities for SCIENCE IN and United Rentals

-0.71

Correlation Coefficient

SCIENCE IN  United Rentals

Pay attention - limited upside

The 3 months correlation between SCIENCE and United is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SCIENCE IN SPORT and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and SCIENCE IN 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 SCIENCE IN SPORT 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 SCIENCE IN i.e., SCIENCE IN and United Rentals go up and down completely randomly.

Pair Corralation between SCIENCE IN and United Rentals

Assuming the 90 days horizon SCIENCE IN SPORT is expected to generate 0.91 times more return on investment than United Rentals. However, SCIENCE IN SPORT is 1.1 times less risky than United Rentals. It trades about 0.06 of its potential returns per unit of risk. United Rentals is currently generating about -0.07 per unit of risk. If you would invest  29.00  in SCIENCE IN SPORT on December 30, 2024 and sell it today you would earn a total of  2.00  from holding SCIENCE IN SPORT or generate 6.9% return on investment over 90 days.

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

SCIENCE IN SPORT  vs.  United Rentals

SCIENCE IN SPORT

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCIENCE IN SPORT are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SCIENCE IN may actually be approaching a critical reversion point that can send shares even higher in April 2025.

United Rentals

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Rentals 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.

Pair Trading with SCIENCE IN and United Rentals

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

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.