Correlation Between United Rentals and EatonPLC
Can any of the company-specific risk be diversified away by investing in both United Rentals and EatonPLC 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 EatonPLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Eaton PLC, you can compare the effects of market volatilities on United Rentals and EatonPLC 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 EatonPLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and EatonPLC.
Diversification Opportunities for United Rentals and EatonPLC
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between United and EatonPLC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC 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 EatonPLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton PLC has no effect on the direction of United Rentals i.e., United Rentals and EatonPLC go up and down completely randomly.
Pair Corralation between United Rentals and EatonPLC
If you would invest 67,982 in United Rentals on September 6, 2024 and sell it today you would earn a total of 18,842 from holding United Rentals or generate 27.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
United Rentals vs. Eaton PLC
Performance |
Timeline |
United Rentals |
Eaton PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
United Rentals and EatonPLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and EatonPLC
The main advantage of trading using opposite United Rentals and EatonPLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, EatonPLC 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 EatonPLC will offset losses from the drop in EatonPLC'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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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