Correlation Between United Rentals and JCDecaux

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

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

Diversification Opportunities for United Rentals and JCDecaux

-0.24

Correlation Coefficient

United Rentals  JCDecaux

Very good diversification

The 3 months correlation between United and JCDecaux is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and JCDecaux SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCDecaux SA 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 JCDecaux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCDecaux SA has no effect on the direction of United Rentals i.e., United Rentals and JCDecaux go up and down completely randomly.

Pair Corralation between United Rentals and JCDecaux

Assuming the 90 days horizon United Rentals is expected to under-perform the JCDecaux. In addition to that, United Rentals is 1.06 times more volatile than JCDecaux SA. It trades about -0.13 of its total potential returns per unit of risk. JCDecaux SA is currently generating about 0.1 per unit of volatility. If you would invest  1,477  in JCDecaux SA on December 21, 2024 and sell it today you would earn a total of  200.00  from holding JCDecaux SA or generate 13.54% 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.  JCDecaux SA

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 fragile performance in the last few months, the Stock's basic 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.

JCDecaux SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JCDecaux SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, JCDecaux reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Rentals and JCDecaux

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

The idea behind United Rentals and JCDecaux SA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.