Correlation Between United Rentals and East Africa
Can any of the company-specific risk be diversified away by investing in both United Rentals and East Africa 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 East Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and East Africa Metals, you can compare the effects of market volatilities on United Rentals and East Africa 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 East Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and East Africa.
Diversification Opportunities for United Rentals and East Africa
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and East is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and East Africa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Africa Metals 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 East Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Africa Metals has no effect on the direction of United Rentals i.e., United Rentals and East Africa go up and down completely randomly.
Pair Corralation between United Rentals and East Africa
Considering the 90-day investment horizon United Rentals is expected to generate 46.0 times less return on investment than East Africa. But when comparing it to its historical volatility, United Rentals is 29.88 times less risky than East Africa. It trades about 0.06 of its potential returns per unit of risk. East Africa Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9.15 in East Africa Metals on September 26, 2024 and sell it today you would earn a total of 1.85 from holding East Africa Metals or generate 20.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.79% |
Values | Daily Returns |
United Rentals vs. East Africa Metals
Performance |
Timeline |
United Rentals |
East Africa Metals |
United Rentals and East Africa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and East Africa
The main advantage of trading using opposite United Rentals and East Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, East Africa 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 East Africa will offset losses from the drop in East Africa's long position.United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
East Africa vs. Puma Exploration | East Africa vs. Sixty North Gold | East Africa vs. Red Pine Exploration | East Africa vs. Altamira Gold Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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