Correlation Between United Rentals and Aurubis AG

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

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

Diversification Opportunities for United Rentals and Aurubis AG

0.56

Correlation Coefficient

United Rentals  Aurubis AG

Very weak diversification

The 3 months correlation between United and Aurubis is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Aurubis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurubis AG 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 Aurubis AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurubis AG has no effect on the direction of United Rentals i.e., United Rentals and Aurubis AG go up and down completely randomly.

Pair Corralation between United Rentals and Aurubis AG

Assuming the 90 days horizon United Rentals is expected to under-perform the Aurubis AG. But the stock apears to be less risky and, when comparing its historical volatility, United Rentals is 1.46 times less risky than Aurubis AG. The stock trades about -0.22 of its potential returns per unit of risk. The Aurubis AG is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  7,900  in Aurubis AG on September 20, 2024 and sell it today you would lose (30.00) from holding Aurubis AG or give up 0.38% 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.  Aurubis AG

United Rentals

Risk-Adjusted Performance

1 of 100

Weak

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

Aurubis AG

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aurubis AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aurubis AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Rentals and Aurubis AG

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

The idea behind United Rentals and Aurubis AG 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.