Correlation Between United Rentals and Mcig

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

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

Diversification Opportunities for United Rentals and Mcig

0.54

Correlation Coefficient

United Rentals  Mcig

Very weak diversification

The 3 months correlation between United and Mcig is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Mcig Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mcig Inc 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 Mcig. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mcig Inc has no effect on the direction of United Rentals i.e., United Rentals and Mcig go up and down completely randomly.

Pair Corralation between United Rentals and Mcig

Considering the 90-day investment horizon United Rentals is expected to under-perform the Mcig. But the stock apears to be less risky and, when comparing its historical volatility, United Rentals is 5.95 times less risky than Mcig. The stock trades about -0.07 of its potential returns per unit of risk. The Mcig Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.72  in Mcig Inc on December 27, 2024 and sell it today you would lose (0.26) from holding Mcig Inc or give up 36.11% of portfolio value over 90 days.

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

United Rentals  vs.  Mcig Inc

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.

Mcig Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mcig Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Mcig demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Rentals and Mcig

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

The idea behind United Rentals and Mcig Inc 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.