Correlation Between UNITED RENTALS and PKSHA TECHNOLOGY

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

By analyzing existing cross correlation between UNITED RENTALS and PKSHA TECHNOLOGY INC, you can compare the effects of market volatilities on UNITED RENTALS and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and PKSHA TECHNOLOGY.

Diversification Opportunities for UNITED RENTALS and PKSHA TECHNOLOGY

0.16

Correlation Coefficient

UNITED RENTALS  PKSHA TECHNOLOGY

Average diversification

The 3 months correlation between UNITED and PKSHA is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and PKSHA TECHNOLOGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PKSHA TECHNOLOGY INC 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 PKSHA TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PKSHA TECHNOLOGY INC has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and PKSHA TECHNOLOGY go up and down completely randomly.

Pair Corralation between UNITED RENTALS and PKSHA TECHNOLOGY

Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 1.11 times less return on investment than PKSHA TECHNOLOGY. But when comparing it to its historical volatility, UNITED RENTALS is 1.65 times less risky than PKSHA TECHNOLOGY. It trades about 0.07 of its potential returns per unit of risk. PKSHA TECHNOLOGY INC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,260  in PKSHA TECHNOLOGY INC on October 24, 2024 and sell it today you would earn a total of  800.00  from holding PKSHA TECHNOLOGY INC or generate 63.49% return on investment over 90 days.

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

UNITED RENTALS  vs.  PKSHA TECHNOLOGY INC

UNITED RENTALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNITED RENTALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, UNITED RENTALS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

PKSHA TECHNOLOGY INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PKSHA TECHNOLOGY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PKSHA TECHNOLOGY is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with UNITED RENTALS and PKSHA TECHNOLOGY

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

The idea behind UNITED RENTALS and PKSHA TECHNOLOGY INC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.