Correlation Between UNITED RENTALS and Universal Display
Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and Universal Display 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 Universal Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED RENTALS and Universal Display, you can compare the effects of market volatilities on UNITED RENTALS and Universal Display 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 Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and Universal Display.
Diversification Opportunities for UNITED RENTALS and Universal Display
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UNITED and Universal is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and Universal Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display 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 Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and Universal Display go up and down completely randomly.
Pair Corralation between UNITED RENTALS and Universal Display
Assuming the 90 days trading horizon UNITED RENTALS is expected to under-perform the Universal Display. But the stock apears to be less risky and, when comparing its historical volatility, UNITED RENTALS is 1.03 times less risky than Universal Display. The stock trades about -0.25 of its potential returns per unit of risk. The Universal Display is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 15,659 in Universal Display on December 1, 2024 and sell it today you would lose (1,144) from holding Universal Display or give up 7.31% 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. Universal Display
Performance |
Timeline |
UNITED RENTALS |
Universal Display |
UNITED RENTALS and Universal Display Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UNITED RENTALS and Universal Display
The main advantage of trading using opposite UNITED RENTALS and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED RENTALS position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display's long position.UNITED RENTALS vs. DATAGROUP SE | UNITED RENTALS vs. ANTA Sports Products | UNITED RENTALS vs. Universal Entertainment | UNITED RENTALS vs. CNVISION MEDIA |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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