Correlation Between United Rentals and Aozora Bank
Can any of the company-specific risk be diversified away by investing in both United Rentals and Aozora Bank 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 Aozora Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Aozora Bank, you can compare the effects of market volatilities on United Rentals and Aozora Bank 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 Aozora Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Aozora Bank.
Diversification Opportunities for United Rentals and Aozora Bank
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Aozora is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Aozora Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aozora Bank 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 Aozora Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aozora Bank has no effect on the direction of United Rentals i.e., United Rentals and Aozora Bank go up and down completely randomly.
Pair Corralation between United Rentals and Aozora Bank
Considering the 90-day investment horizon United Rentals is expected to under-perform the Aozora Bank. In addition to that, United Rentals is 1.3 times more volatile than Aozora Bank. It trades about -0.23 of its total potential returns per unit of risk. Aozora Bank is currently generating about -0.07 per unit of volatility. If you would invest 1,507 in Aozora Bank on December 1, 2024 and sell it today you would lose (107.00) from holding Aozora Bank or give up 7.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United Rentals vs. Aozora Bank
Performance |
Timeline |
United Rentals |
Aozora Bank |
United Rentals and Aozora Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and Aozora Bank
The main advantage of trading using opposite United Rentals and Aozora Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Aozora Bank 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 Aozora Bank will offset losses from the drop in Aozora Bank'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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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