Correlation Between McGrath RentCorp and 46188BAA0

Can any of the company-specific risk be diversified away by investing in both McGrath RentCorp and 46188BAA0 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 McGrath RentCorp and 46188BAA0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between McGrath RentCorp and INVH 2 15 AUG 31, you can compare the effects of market volatilities on McGrath RentCorp and 46188BAA0 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 McGrath RentCorp with a short position of 46188BAA0. Check out your portfolio center. Please also check ongoing floating volatility patterns of McGrath RentCorp and 46188BAA0.

Diversification Opportunities for McGrath RentCorp and 46188BAA0

0.23

Correlation Coefficient

McGrath RentCorp  46188BAA0

Modest diversification

The 3 months correlation between McGrath and 46188BAA0 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding McGrath RentCorp and INVH 2 15 AUG 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVH 2 15 and McGrath RentCorp 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 McGrath RentCorp are associated (or correlated) with 46188BAA0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVH 2 15 has no effect on the direction of McGrath RentCorp i.e., McGrath RentCorp and 46188BAA0 go up and down completely randomly.

Pair Corralation between McGrath RentCorp and 46188BAA0

Given the investment horizon of 90 days McGrath RentCorp is expected to generate 2.8 times more return on investment than 46188BAA0. However, McGrath RentCorp is 2.8 times more volatile than INVH 2 15 AUG 31. It trades about 0.05 of its potential returns per unit of risk. INVH 2 15 AUG 31 is currently generating about -0.01 per unit of risk. If you would invest  11,224  in McGrath RentCorp on December 25, 2024 and sell it today you would earn a total of  411.00  from holding McGrath RentCorp or generate 3.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.53%
Values	Daily Returns

McGrath RentCorp  vs.  INVH 2 15 AUG 31

McGrath RentCorp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in McGrath RentCorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, McGrath RentCorp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

INVH 2 15

Risk-Adjusted Performance

Very Weak

Over the last 90 days INVH 2 15 AUG 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 46188BAA0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with McGrath RentCorp and 46188BAA0

The main advantage of trading using opposite McGrath RentCorp and 46188BAA0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McGrath RentCorp position performs unexpectedly, 46188BAA0 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 46188BAA0 will offset losses from the drop in 46188BAA0's long position.

The idea behind McGrath RentCorp and INVH 2 15 AUG 31 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.