Correlation Between International Consolidated and McGrath RentCorp

Can any of the company-specific risk be diversified away by investing in both International Consolidated and McGrath RentCorp 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 International Consolidated and McGrath RentCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between International Consolidated Companies and McGrath RentCorp, you can compare the effects of market volatilities on International Consolidated and McGrath RentCorp 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 International Consolidated with a short position of McGrath RentCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and McGrath RentCorp.

Diversification Opportunities for International Consolidated and McGrath RentCorp

-0.53

Correlation Coefficient

International Consolidated  McGrath RentCorp

Excellent diversification

The 3 months correlation between International and McGrath is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Com and McGrath RentCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McGrath RentCorp and International Consolidated 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 International Consolidated Companies are associated (or correlated) with McGrath RentCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McGrath RentCorp has no effect on the direction of International Consolidated i.e., International Consolidated and McGrath RentCorp go up and down completely randomly.

Pair Corralation between International Consolidated and McGrath RentCorp

Given the investment horizon of 90 days International Consolidated Companies is expected to generate 154.17 times more return on investment than McGrath RentCorp. However, International Consolidated is 154.17 times more volatile than McGrath RentCorp. It trades about 0.27 of its potential returns per unit of risk. McGrath RentCorp is currently generating about 0.04 per unit of risk. If you would invest  40.00  in International Consolidated Companies on September 30, 2024 and sell it today you would lose (37.50) from holding International Consolidated Companies or give up 93.75% of portfolio value over 90 days.

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

International Consolidated Com  vs.  McGrath RentCorp

International Consolidated

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Companies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

McGrath RentCorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in McGrath RentCorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, McGrath RentCorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with International Consolidated and McGrath RentCorp

The main advantage of trading using opposite International Consolidated and McGrath RentCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, McGrath RentCorp 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 McGrath RentCorp will offset losses from the drop in McGrath RentCorp's long position.

The idea behind International Consolidated Companies and McGrath RentCorp 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.