Correlation Between United Rentals and Lkcm Balanced

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

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

Diversification Opportunities for United Rentals and Lkcm Balanced

0.69

Correlation Coefficient

United Rentals  Lkcm Balanced

Poor diversification

The 3 months correlation between United and Lkcm is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Lkcm Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lkcm Balanced 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 Lkcm Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lkcm Balanced has no effect on the direction of United Rentals i.e., United Rentals and Lkcm Balanced go up and down completely randomly.

Pair Corralation between United Rentals and Lkcm Balanced

Considering the 90-day investment horizon United Rentals is expected to under-perform the Lkcm Balanced. In addition to that, United Rentals is 4.06 times more volatile than Lkcm Balanced Fund. It trades about -0.06 of its total potential returns per unit of risk. Lkcm Balanced Fund is currently generating about -0.01 per unit of volatility. If you would invest  2,776  in Lkcm Balanced Fund on December 27, 2024 and sell it today you would lose (11.00) from holding Lkcm Balanced Fund or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

United Rentals  vs.  Lkcm Balanced Fund

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.

Lkcm Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lkcm Balanced Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Lkcm Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Rentals and Lkcm Balanced

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

The idea behind United Rentals and Lkcm Balanced Fund 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.