Correlation Between United Rentals and APPC

Can any of the company-specific risk be diversified away by investing in both United Rentals and APPC 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 APPC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Rentals and APPC, you can compare the effects of market volatilities on United Rentals and APPC 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 APPC. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and APPC.

Diversification Opportunities for United Rentals and APPC

0.89

Correlation Coefficient

United Rentals  APPC

Very poor diversification

The 3 months correlation between United and APPC is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and APPC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPC 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 APPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPC has no effect on the direction of United Rentals i.e., United Rentals and APPC go up and down completely randomly.

Pair Corralation between United Rentals and APPC

Considering the 90-day investment horizon United Rentals is expected to under-perform the APPC. But the stock apears to be less risky and, when comparing its historical volatility, United Rentals is 1.04 times less risky than APPC. The stock trades about -0.06 of its potential returns per unit of risk. The APPC is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  0.09  in APPC on December 25, 2024 and sell it today you would lose (0.01) from holding APPC or give up 8.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

United Rentals  vs.  APPC

United Rentals

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Rentals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

APPC

Risk-Adjusted Performance

Very Weak

Over the last 90 days APPC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for APPC shareholders.

Pair Trading with United Rentals and APPC

The main advantage of trading using opposite United Rentals and APPC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, APPC 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 APPC will offset losses from the drop in APPC's long position.

The idea behind United Rentals and APPC 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.