Correlation Between United Rentals and Brikor

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

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

Diversification Opportunities for United Rentals and Brikor

0.14

Correlation Coefficient

United Rentals  Brikor

Average diversification

The 3 months correlation between United and Brikor is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Brikor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brikor 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 Brikor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brikor has no effect on the direction of United Rentals i.e., United Rentals and Brikor go up and down completely randomly.

Pair Corralation between United Rentals and Brikor

Considering the 90-day investment horizon United Rentals is expected to generate 1.14 times less return on investment than Brikor. But when comparing it to its historical volatility, United Rentals is 3.46 times less risky than Brikor. It trades about 0.19 of its potential returns per unit of risk. Brikor is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,400  in Brikor on September 5, 2024 and sell it today you would earn a total of  200.00  from holding Brikor or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

United Rentals  vs.  Brikor

United Rentals

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, United Rentals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Brikor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brikor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Brikor exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Rentals and Brikor

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

The idea behind United Rentals and Brikor 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.