Correlation Between United Rentals and Group 6
Can any of the company-specific risk be diversified away by investing in both United Rentals and Group 6 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 Group 6 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Group 6 Metals, you can compare the effects of market volatilities on United Rentals and Group 6 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 Group 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Group 6.
Diversification Opportunities for United Rentals and Group 6
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Group is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Group 6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 6 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 Group 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 6 Metals has no effect on the direction of United Rentals i.e., United Rentals and Group 6 go up and down completely randomly.
Pair Corralation between United Rentals and Group 6
Considering the 90-day investment horizon United Rentals is expected to generate 0.38 times more return on investment than Group 6. However, United Rentals is 2.64 times less risky than Group 6. It trades about 0.09 of its potential returns per unit of risk. Group 6 Metals is currently generating about -0.05 per unit of risk. If you would invest 45,737 in United Rentals on September 10, 2024 and sell it today you would earn a total of 40,155 from holding United Rentals or generate 87.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.88% |
Values | Daily Returns |
United Rentals vs. Group 6 Metals
Performance |
Timeline |
United Rentals |
Group 6 Metals |
United Rentals and Group 6 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and Group 6
The main advantage of trading using opposite United Rentals and Group 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Group 6 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 Group 6 will offset losses from the drop in Group 6'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 |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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