Correlation Between United Rentals and Nighthawk Gold

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

Diversification Opportunities for United Rentals and Nighthawk Gold

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between United and Nighthawk is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Nighthawk Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nighthawk Gold Corp 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 Nighthawk Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nighthawk Gold Corp has no effect on the direction of United Rentals i.e., United Rentals and Nighthawk Gold go up and down completely randomly.

Pair Corralation between United Rentals and Nighthawk Gold

If you would invest  67,982  in United Rentals on September 6, 2024 and sell it today you would earn a total of  18,842  from holding United Rentals or generate 27.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy1.59%
ValuesDaily Returns

United Rentals  vs.  Nighthawk Gold Corp

 Performance 
       Timeline  
United Rentals 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, United Rentals demonstrated solid returns over the last few months and may actually be approaching a breakup point.
Nighthawk Gold Corp 

Risk-Adjusted Performance

0 of 100

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

United Rentals and Nighthawk Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with United Rentals and Nighthawk Gold

The main advantage of trading using opposite United Rentals and Nighthawk Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Nighthawk Gold 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 Nighthawk Gold will offset losses from the drop in Nighthawk Gold's long position.
The idea behind United Rentals and Nighthawk Gold Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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