Correlation Between United Rentals and Assystem

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

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

Diversification Opportunities for United Rentals and Assystem

0.07

Correlation Coefficient

United Rentals  Assystem

Significant diversification

The 3 months correlation between United and Assystem is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Assystem SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assystem SA 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 Assystem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assystem SA has no effect on the direction of United Rentals i.e., United Rentals and Assystem go up and down completely randomly.

Pair Corralation between United Rentals and Assystem

Considering the 90-day investment horizon United Rentals is expected to generate 0.74 times more return on investment than Assystem. However, United Rentals is 1.35 times less risky than Assystem. It trades about -0.05 of its potential returns per unit of risk. Assystem SA is currently generating about -0.11 per unit of risk. If you would invest  70,431  in United Rentals on December 29, 2024 and sell it today you would lose (5,839) from holding United Rentals or give up 8.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.85%
Values	Daily Returns

United Rentals  vs.  Assystem SA

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.

Assystem SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Assystem SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with United Rentals and Assystem

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

The idea behind United Rentals and Assystem SA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.