Correlation Between Mosaic and United Rentals

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

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

Diversification Opportunities for Mosaic and United Rentals

0.33

Correlation Coefficient

Mosaic  United Rentals

Weak diversification

The 3 months correlation between Mosaic and United is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding The Mosaic and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Mosaic 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 The Mosaic 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 Mosaic i.e., Mosaic and United Rentals go up and down completely randomly.

Pair Corralation between Mosaic and United Rentals

Assuming the 90 days trading horizon The Mosaic is expected to under-perform the United Rentals. But the stock apears to be less risky and, when comparing its historical volatility, The Mosaic is 1.22 times less risky than United Rentals. The stock trades about -0.02 of its potential returns per unit of risk. The United Rentals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7,131  in United Rentals on October 7, 2024 and sell it today you would earn a total of  8,368  from holding United Rentals or generate 117.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.78%
Values	Daily Returns

The Mosaic  vs.  United Rentals

Mosaic

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Mosaic are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mosaic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

United Rentals

Risk-Adjusted Performance

1 of 100

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 newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mosaic and United Rentals

The main advantage of trading using opposite Mosaic and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mosaic 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 The Mosaic 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.