Correlation Between United Rentals and HMM
Can any of the company-specific risk be diversified away by investing in both United Rentals and HMM 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 HMM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and HMM Co, you can compare the effects of market volatilities on United Rentals and HMM 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 HMM. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and HMM.
Diversification Opportunities for United Rentals and HMM
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between United and HMM is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and HMM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMM Co 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 HMM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMM Co has no effect on the direction of United Rentals i.e., United Rentals and HMM go up and down completely randomly.
Pair Corralation between United Rentals and HMM
Considering the 90-day investment horizon United Rentals is expected to under-perform the HMM. But the stock apears to be less risky and, when comparing its historical volatility, United Rentals is 1.3 times less risky than HMM. The stock trades about -0.22 of its potential returns per unit of risk. The HMM Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,712,050 in HMM Co on December 2, 2024 and sell it today you would earn a total of 246,950 from holding HMM Co or generate 14.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 96.72% |
Values | Daily Returns |
United Rentals vs. HMM Co
Performance |
Timeline |
United Rentals |
HMM Co |
United Rentals and HMM Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and HMM
The main advantage of trading using opposite United Rentals and HMM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, HMM 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 HMM will offset losses from the drop in HMM's long position.United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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