Correlation Between United Rentals and Mach7 Technologies

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both United Rentals and Mach7 Technologies 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 Mach7 Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Mach7 Technologies, you can compare the effects of market volatilities on United Rentals and Mach7 Technologies 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 Mach7 Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Mach7 Technologies.

Diversification Opportunities for United Rentals and Mach7 Technologies

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between United and Mach7 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Mach7 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mach7 Technologies 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 Mach7 Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mach7 Technologies has no effect on the direction of United Rentals i.e., United Rentals and Mach7 Technologies go up and down completely randomly.

Pair Corralation between United Rentals and Mach7 Technologies

Considering the 90-day investment horizon United Rentals is expected to under-perform the Mach7 Technologies. But the stock apears to be less risky and, when comparing its historical volatility, United Rentals is 1.73 times less risky than Mach7 Technologies. The stock trades about -0.06 of its potential returns per unit of risk. The Mach7 Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Mach7 Technologies on December 26, 2024 and sell it today you would lose (1.00) from holding Mach7 Technologies or give up 2.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.36%
ValuesDaily Returns

United Rentals  vs.  Mach7 Technologies

 Performance 
       Timeline  
United Rentals 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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.
Mach7 Technologies 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Over the last 90 days Mach7 Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mach7 Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

United Rentals and Mach7 Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Rentals and Mach7 Technologies

The main advantage of trading using opposite United Rentals and Mach7 Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Mach7 Technologies 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 Mach7 Technologies will offset losses from the drop in Mach7 Technologies' long position.
The idea behind United Rentals and Mach7 Technologies 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

Other Complementary Tools

Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas