Correlation Between United Rentals and MPC Container

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

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

Diversification Opportunities for United Rentals and MPC Container

0.2

Correlation Coefficient

United Rentals  MPC Container

Modest diversification

The 3 months correlation between United and MPC is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and MPC Container Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPC Container Ships 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 MPC Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPC Container Ships has no effect on the direction of United Rentals i.e., United Rentals and MPC Container go up and down completely randomly.

Pair Corralation between United Rentals and MPC Container

Considering the 90-day investment horizon United Rentals is expected to under-perform the MPC Container. But the stock apears to be less risky and, when comparing its historical volatility, United Rentals is 1.12 times less risky than MPC Container. The stock trades about -0.07 of its potential returns per unit of risk. The MPC Container Ships is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  167.00  in MPC Container Ships on December 27, 2024 and sell it today you would lose (9.00) from holding MPC Container Ships or give up 5.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

United Rentals  vs.  MPC Container Ships

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.

MPC Container Ships

Risk-Adjusted Performance

Very Weak

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

Pair Trading with United Rentals and MPC Container

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

The idea behind United Rentals and MPC Container Ships 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.