Correlation Between United Rentals and Brainsway

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

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

Diversification Opportunities for United Rentals and Brainsway

0.53

Correlation Coefficient

United Rentals  Brainsway

Very weak diversification

The 3 months correlation between United and Brainsway is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Brainsway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainsway 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 Brainsway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainsway has no effect on the direction of United Rentals i.e., United Rentals and Brainsway go up and down completely randomly.

Pair Corralation between United Rentals and Brainsway

Considering the 90-day investment horizon United Rentals is expected to under-perform the Brainsway. But the stock apears to be less risky and, when comparing its historical volatility, United Rentals is 1.33 times less risky than Brainsway. The stock trades about -0.05 of its potential returns per unit of risk. The Brainsway is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  922.00  in Brainsway on December 29, 2024 and sell it today you would earn a total of  8.00  from holding Brainsway or generate 0.87% return on investment over 90 days.

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

United Rentals  vs.  Brainsway

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.

Brainsway

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brainsway are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Brainsway is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Rentals and Brainsway

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

The idea behind United Rentals and Brainsway 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.