Correlation Between United Rentals and Ambase Corp
Can any of the company-specific risk be diversified away by investing in both United Rentals and Ambase Corp 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 Ambase Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Ambase Corp, you can compare the effects of market volatilities on United Rentals and Ambase Corp 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 Ambase Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Ambase Corp.
Diversification Opportunities for United Rentals and Ambase Corp
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Ambase is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Ambase Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambase Corp 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 Ambase Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambase Corp has no effect on the direction of United Rentals i.e., United Rentals and Ambase Corp go up and down completely randomly.
Pair Corralation between United Rentals and Ambase Corp
Considering the 90-day investment horizon United Rentals is expected to under-perform the Ambase Corp. But the stock apears to be less risky and, when comparing its historical volatility, United Rentals is 1.55 times less risky than Ambase Corp. The stock trades about -0.23 of its potential returns per unit of risk. The Ambase Corp is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Ambase Corp on December 1, 2024 and sell it today you would lose (5.00) from holding Ambase Corp or give up 14.29% 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. Ambase Corp
Performance |
Timeline |
United Rentals |
Ambase Corp |
United Rentals and Ambase Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and Ambase Corp
The main advantage of trading using opposite United Rentals and Ambase Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Ambase Corp 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 Ambase Corp will offset losses from the drop in Ambase Corp'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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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