Correlation Between CRISPR Therapeutics and United Rentals

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

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

Diversification Opportunities for CRISPR Therapeutics and United Rentals

0.64

Correlation Coefficient

CRISPR Therapeutics  United Rentals

Poor diversification

The 3 months correlation between CRISPR and United is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CRISPR Therapeutics AG and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and CRISPR Therapeutics 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 CRISPR Therapeutics AG 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 CRISPR Therapeutics i.e., CRISPR Therapeutics and United Rentals go up and down completely randomly.

Pair Corralation between CRISPR Therapeutics and United Rentals

Assuming the 90 days trading horizon CRISPR Therapeutics AG is expected to under-perform the United Rentals. But the stock apears to be less risky and, when comparing its historical volatility, CRISPR Therapeutics AG is 1.3 times less risky than United Rentals. The stock trades about -0.03 of its potential returns per unit of risk. The United Rentals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  16,626  in United Rentals on October 25, 2024 and sell it today you would lose (426.00) from holding United Rentals or give up 2.56% of portfolio value over 90 days.

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

CRISPR Therapeutics AG  vs.  United Rentals

CRISPR Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CRISPR Therapeutics AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 somewhat strong basic indicators, United Rentals is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CRISPR Therapeutics and United Rentals

The main advantage of trading using opposite CRISPR Therapeutics and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRISPR Therapeutics 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 CRISPR Therapeutics AG 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..