Correlation Between UNITED RENTALS and Dno ASA

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

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

Diversification Opportunities for UNITED RENTALS and Dno ASA

0.57

Correlation Coefficient

UNITED RENTALS  Dno ASA

Very weak diversification

The 3 months correlation between UNITED and Dno is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA 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 Dno ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dno ASA has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Dno ASA go up and down completely randomly.

Pair Corralation between UNITED RENTALS and Dno ASA

Assuming the 90 days trading horizon UNITED RENTALS is expected to under-perform the Dno ASA. But the stock apears to be less risky and, when comparing its historical volatility, UNITED RENTALS is 1.12 times less risky than Dno ASA. The stock trades about -0.14 of its potential returns per unit of risk. The Dno ASA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,370  in Dno ASA on September 17, 2024 and sell it today you would lose (5.00) from holding Dno ASA or give up 0.36% of portfolio value over 90 days.

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

UNITED RENTALS  vs.  Dno ASA

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. In spite of rather uncertain basic indicators, UNITED RENTALS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dno ASA

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with UNITED RENTALS and Dno ASA

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

The idea behind UNITED RENTALS and Dno ASA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..