Correlation Between United Rentals and IShares Govt

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

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

Diversification Opportunities for United Rentals and IShares Govt

0.23

Correlation Coefficient

United Rentals  IShares Govt

Modest diversification

The 3 months correlation between United and IShares is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and iShares Govt Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Govt Bond 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 IShares Govt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Govt Bond has no effect on the direction of United Rentals i.e., United Rentals and IShares Govt go up and down completely randomly.

Pair Corralation between United Rentals and IShares Govt

Considering the 90-day investment horizon United Rentals is expected to under-perform the IShares Govt. In addition to that, United Rentals is 8.46 times more volatile than iShares Govt Bond. It trades about -0.22 of its total potential returns per unit of risk. iShares Govt Bond is currently generating about 0.09 per unit of volatility. If you would invest  15,103  in iShares Govt Bond on December 2, 2024 and sell it today you would earn a total of  142.00  from holding iShares Govt Bond or generate 0.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	77.05%
Values	Daily Returns

United Rentals  vs.  iShares Govt Bond

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 uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

iShares Govt Bond

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Govt Bond are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Govt is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with United Rentals and IShares Govt

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

The idea behind United Rentals and iShares Govt Bond 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.