Correlation Between United Rentals and CAVA Group,

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

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

Diversification Opportunities for United Rentals and CAVA Group,

0.86

Correlation Coefficient

United Rentals  CAVA Group,

Very poor diversification

The 3 months correlation between United and CAVA is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and CAVA Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAVA Group, 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 CAVA Group,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAVA Group, has no effect on the direction of United Rentals i.e., United Rentals and CAVA Group, go up and down completely randomly.

Pair Corralation between United Rentals and CAVA Group,

Considering the 90-day investment horizon United Rentals is expected to generate 16.03 times less return on investment than CAVA Group,. But when comparing it to its historical volatility, United Rentals is 1.29 times less risky than CAVA Group,. It trades about 0.0 of its potential returns per unit of risk. CAVA Group, is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12,430  in CAVA Group, on September 18, 2024 and sell it today you would earn a total of  249.00  from holding CAVA Group, or generate 2.0% return on investment over 90 days.

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

United Rentals  vs.  CAVA Group,

United Rentals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Rentals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, United Rentals is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

CAVA Group,

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with United Rentals and CAVA Group,

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

The idea behind United Rentals and CAVA Group, 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.