Correlation Between United Rentals and BIONTECH

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

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

Diversification Opportunities for United Rentals and BIONTECH

0.36

Correlation Coefficient

United Rentals  BIONTECH

Weak diversification

The 3 months correlation between United and BIONTECH is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and BIONTECH SE DRN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIONTECH SE DRN and United Rentals 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 United Rentals are associated (or correlated) with BIONTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIONTECH SE DRN has no effect on the direction of United Rentals i.e., United Rentals and BIONTECH go up and down completely randomly.

Pair Corralation between United Rentals and BIONTECH

Assuming the 90 days trading horizon United Rentals is expected to generate 1.02 times more return on investment than BIONTECH. However, United Rentals is 1.02 times more volatile than BIONTECH SE DRN. It trades about 0.09 of its potential returns per unit of risk. BIONTECH SE DRN is currently generating about 0.0 per unit of risk. If you would invest  6,945  in United Rentals on September 28, 2024 and sell it today you would earn a total of  11,939  from holding United Rentals or generate 171.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

United Rentals  vs.  BIONTECH SE DRN

United Rentals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, United Rentals sustained solid returns over the last few months and may actually be approaching a breakup point.

BIONTECH SE DRN

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BIONTECH SE DRN are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BIONTECH may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with United Rentals and BIONTECH

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

The idea behind United Rentals and BIONTECH SE DRN 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.