Correlation Between United Rentals and Beeks TradingLtd

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

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

Diversification Opportunities for United Rentals and Beeks TradingLtd

0.35

Correlation Coefficient

United Rentals  Beeks TradingLtd

Weak diversification

The 3 months correlation between United and Beeks is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Beeks Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beeks TradingLtd 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 Beeks TradingLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beeks TradingLtd has no effect on the direction of United Rentals i.e., United Rentals and Beeks TradingLtd go up and down completely randomly.

Pair Corralation between United Rentals and Beeks TradingLtd

Considering the 90-day investment horizon United Rentals is expected to generate 0.55 times more return on investment than Beeks TradingLtd. However, United Rentals is 1.83 times less risky than Beeks TradingLtd. It trades about -0.06 of its potential returns per unit of risk. Beeks Trading is currently generating about -0.05 per unit of risk. If you would invest  72,438  in United Rentals on December 26, 2024 and sell it today you would lose (7,099) from holding United Rentals or give up 9.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

United Rentals  vs.  Beeks Trading

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.

Beeks TradingLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beeks Trading has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with United Rentals and Beeks TradingLtd

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

The idea behind United Rentals and Beeks Trading 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.