Correlation Between United Rentals and Umicore SA

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

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

Diversification Opportunities for United Rentals and Umicore SA

0.0

Correlation Coefficient

United Rentals  Umicore SA

Pay attention - limited upside

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

Pair Corralation between United Rentals and Umicore SA

Considering the 90-day investment horizon United Rentals is expected to generate 0.77 times more return on investment than Umicore SA. However, United Rentals is 1.29 times less risky than Umicore SA. It trades about 0.1 of its potential returns per unit of risk. Umicore SA is currently generating about 0.08 per unit of risk. If you would invest  71,129  in United Rentals on September 12, 2024 and sell it today you would earn a total of  8,568  from holding United Rentals or generate 12.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

United Rentals  vs.  Umicore SA

United Rentals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, United Rentals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Umicore SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Umicore SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking indicators, Umicore SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with United Rentals and Umicore SA

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

The idea behind United Rentals and Umicore SA 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.