Correlation Between United Rentals and Alphabet

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

By analyzing existing cross correlation between United Rentals and Alphabet Class A, you can compare the effects of market volatilities on United Rentals and Alphabet 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 Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Alphabet.

Diversification Opportunities for United Rentals and Alphabet

0.87

Correlation Coefficient

United Rentals  Alphabet

Very poor diversification

The 3 months correlation between United and Alphabet is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Alphabet Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class A 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 Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class A has no effect on the direction of United Rentals i.e., United Rentals and Alphabet go up and down completely randomly.

Pair Corralation between United Rentals and Alphabet

Assuming the 90 days horizon United Rentals is expected to generate 1.21 times more return on investment than Alphabet. However, United Rentals is 1.21 times more volatile than Alphabet Class A. It trades about -0.07 of its potential returns per unit of risk. Alphabet Class A is currently generating about -0.18 per unit of risk. If you would invest  67,897  in United Rentals on December 30, 2024 and sell it today you would lose (8,197) from holding United Rentals or give up 12.07% of portfolio value over 90 days.

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

United Rentals  vs.  Alphabet Class A

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Alphabet Class A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Class A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with United Rentals and Alphabet

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

The idea behind United Rentals and Alphabet Class A 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.