Correlation Between United Rentals and WT OFFSHORE

Can any of the company-specific risk be diversified away by investing in both United Rentals and WT 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 WT 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 WT OFFSHORE, you can compare the effects of market volatilities on United Rentals and WT 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 WT OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and WT OFFSHORE.

Diversification Opportunities for United Rentals and WT OFFSHORE

0.49

Correlation Coefficient

United Rentals  WT OFFSHORE

Very weak diversification

The 3 months correlation between United and UWV is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and WT OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT 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 WT OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT OFFSHORE has no effect on the direction of United Rentals i.e., United Rentals and WT OFFSHORE go up and down completely randomly.

Pair Corralation between United Rentals and WT OFFSHORE

Assuming the 90 days horizon United Rentals is expected to under-perform the WT OFFSHORE. But the stock apears to be less risky and, when comparing its historical volatility, United Rentals is 1.56 times less risky than WT OFFSHORE. The stock trades about -0.12 of its potential returns per unit of risk. The WT OFFSHORE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  135.00  in WT OFFSHORE on December 19, 2024 and sell it today you would earn a total of  7.00  from holding WT OFFSHORE or generate 5.19% return on investment over 90 days.

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

United Rentals  vs.  WT OFFSHORE

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 unsteady 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.

WT OFFSHORE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WT OFFSHORE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WT OFFSHORE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with United Rentals and WT OFFSHORE

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

The idea behind United Rentals and WT OFFSHORE 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.