Correlation Between United Rentals and SSgA

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

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

Diversification Opportunities for United Rentals and SSgA

0.0

Correlation Coefficient

United Rentals  SSgA

Pay attention - limited upside

The 3 months correlation between United and SSgA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and SSgA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA 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 SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA has no effect on the direction of United Rentals i.e., United Rentals and SSgA go up and down completely randomly.

Pair Corralation between United Rentals and SSgA

If you would invest (100.00) in SSgA on December 26, 2024 and sell it today you would earn a total of  100.00  from holding SSgA or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

United Rentals  vs.  SSgA

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.

SSgA

Risk-Adjusted Performance

Very Weak

Over the last 90 days SSgA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SSgA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with United Rentals and SSgA

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

The idea behind United Rentals and SSgA 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.