Correlation Between USU Software and United Rentals

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

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

Diversification Opportunities for USU Software and United Rentals

-0.46

Correlation Coefficient

USU Software  United Rentals

Very good diversification

The 3 months correlation between USU and United is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding USU Software AG and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and USU Software 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 USU Software 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 USU Software i.e., USU Software and United Rentals go up and down completely randomly.

Pair Corralation between USU Software and United Rentals

Assuming the 90 days trading horizon USU Software AG is expected to generate 0.58 times more return on investment than United Rentals. However, USU Software AG is 1.72 times less risky than United Rentals. It trades about 0.06 of its potential returns per unit of risk. United Rentals is currently generating about -0.11 per unit of risk. If you would invest  2,150  in USU Software AG on December 20, 2024 and sell it today you would earn a total of  100.00  from holding USU Software AG or generate 4.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

USU Software AG  vs.  United Rentals

USU Software AG

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in USU Software AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, USU Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

United Rentals

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Rentals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with USU Software and United Rentals

The main advantage of trading using opposite USU Software and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USU Software 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 USU Software 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.