Correlation Between UNITED RENTALS and Cboe Global

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

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

Diversification Opportunities for UNITED RENTALS and Cboe Global

-0.3

Correlation Coefficient

UNITED RENTALS  Cboe Global

Very good diversification

The 3 months correlation between UNITED and Cboe is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Cboe Global Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cboe Global Markets 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 Cboe Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cboe Global Markets has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Cboe Global go up and down completely randomly.

Pair Corralation between UNITED RENTALS and Cboe Global

Assuming the 90 days trading horizon UNITED RENTALS is expected to under-perform the Cboe Global. In addition to that, UNITED RENTALS is 1.33 times more volatile than Cboe Global Markets. It trades about -0.15 of its total potential returns per unit of risk. Cboe Global Markets is currently generating about 0.07 per unit of volatility. If you would invest  18,524  in Cboe Global Markets on December 20, 2024 and sell it today you would earn a total of  1,076  from holding Cboe Global Markets or generate 5.81% return on investment over 90 days.

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

UNITED RENTALS  vs.  Cboe Global Markets

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. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cboe Global Markets

Risk-Adjusted Performance

Weak

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

Pair Trading with UNITED RENTALS and Cboe Global

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

The idea behind UNITED RENTALS and Cboe Global Markets 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.