Correlation Between G2D Investments and United Rentals

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Can any of the company-specific risk be diversified away by investing in both G2D Investments 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 G2D Investments and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G2D Investments and United Rentals, you can compare the effects of market volatilities on G2D Investments 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 G2D Investments with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of G2D Investments and United Rentals.

Diversification Opportunities for G2D Investments and United Rentals

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between G2D and United is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding G2D Investments and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and G2D Investments 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 G2D Investments 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 G2D Investments i.e., G2D Investments and United Rentals go up and down completely randomly.

Pair Corralation between G2D Investments and United Rentals

Assuming the 90 days trading horizon G2D Investments is expected to generate 0.41 times more return on investment than United Rentals. However, G2D Investments is 2.46 times less risky than United Rentals. It trades about -0.21 of its potential returns per unit of risk. United Rentals is currently generating about -0.11 per unit of risk. If you would invest  202.00  in G2D Investments on October 8, 2024 and sell it today you would lose (19.00) from holding G2D Investments or give up 9.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

G2D Investments  vs.  United Rentals

 Performance 
       Timeline  
G2D Investments 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days G2D Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
United Rentals 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, United Rentals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

G2D Investments and United Rentals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with G2D Investments and United Rentals

The main advantage of trading using opposite G2D Investments and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G2D Investments 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 G2D Investments 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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