Correlation Between UNITED RENTALS and EIDESVIK OFFSHORE

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

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

Diversification Opportunities for UNITED RENTALS and EIDESVIK OFFSHORE

0.01

Correlation Coefficient

UNITED RENTALS  EIDESVIK OFFSHORE

Significant diversification

The 3 months correlation between UNITED and EIDESVIK is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and EIDESVIK OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EIDESVIK OFFSHORE has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and EIDESVIK OFFSHORE go up and down completely randomly.

Pair Corralation between UNITED RENTALS and EIDESVIK OFFSHORE

Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 1.0 times more return on investment than EIDESVIK OFFSHORE. However, UNITED RENTALS is 1.0 times more volatile than EIDESVIK OFFSHORE NK. It trades about 0.23 of its potential returns per unit of risk. EIDESVIK OFFSHORE NK is currently generating about 0.09 per unit of risk. If you would invest  69,260  in UNITED RENTALS on October 25, 2024 and sell it today you would earn a total of  5,420  from holding UNITED RENTALS or generate 7.83% 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.  EIDESVIK OFFSHORE NK

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.

EIDESVIK OFFSHORE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EIDESVIK OFFSHORE NK are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, EIDESVIK OFFSHORE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with UNITED RENTALS and EIDESVIK OFFSHORE

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

The idea behind UNITED RENTALS and EIDESVIK OFFSHORE NK 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.