Correlation Between United Rentals and WideOpenWest

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Can any of the company-specific risk be diversified away by investing in both United Rentals and WideOpenWest 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 WideOpenWest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and WideOpenWest, you can compare the effects of market volatilities on United Rentals and WideOpenWest 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 WideOpenWest. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and WideOpenWest.

Diversification Opportunities for United Rentals and WideOpenWest

0.56
  Correlation Coefficient

Very weak diversification

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

Pair Corralation between United Rentals and WideOpenWest

Assuming the 90 days horizon United Rentals is expected to generate 1.15 times more return on investment than WideOpenWest. However, United Rentals is 1.15 times more volatile than WideOpenWest. It trades about 0.05 of its potential returns per unit of risk. WideOpenWest is currently generating about 0.01 per unit of risk. If you would invest  69,122  in United Rentals on September 18, 2024 and sell it today you would earn a total of  4,998  from holding United Rentals or generate 7.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

United Rentals  vs.  WideOpenWest

 Performance 
       Timeline  
United Rentals 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Rentals may actually be approaching a critical reversion point that can send shares even higher in January 2025.
WideOpenWest 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days WideOpenWest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, WideOpenWest is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

United Rentals and WideOpenWest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Rentals and WideOpenWest

The main advantage of trading using opposite United Rentals and WideOpenWest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, WideOpenWest 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 WideOpenWest will offset losses from the drop in WideOpenWest's long position.
The idea behind United Rentals and WideOpenWest 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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