Correlation Between United Rentals and Baumer SA

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

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

Diversification Opportunities for United Rentals and Baumer SA

-0.6

Correlation Coefficient

United Rentals  Baumer SA

Excellent diversification

The 3 months correlation between United and Baumer is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Baumer SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baumer SA 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 Baumer SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baumer SA has no effect on the direction of United Rentals i.e., United Rentals and Baumer SA go up and down completely randomly.

Pair Corralation between United Rentals and Baumer SA

Assuming the 90 days trading horizon United Rentals is expected to under-perform the Baumer SA. In addition to that, United Rentals is 2.0 times more volatile than Baumer SA. It trades about -0.12 of its total potential returns per unit of risk. Baumer SA is currently generating about 0.16 per unit of volatility. If you would invest  1,300  in Baumer SA on December 4, 2024 and sell it today you would earn a total of  240.00  from holding Baumer SA or generate 18.46% return on investment over 90 days.

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

United Rentals  vs.  Baumer SA

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Baumer SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Baumer SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Baumer SA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Rentals and Baumer SA

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

The idea behind United Rentals and Baumer SA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.