Correlation Between United Rentals and Peyto ExplorationDevel

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

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

Diversification Opportunities for United Rentals and Peyto ExplorationDevel

-0.42

Correlation Coefficient

United Rentals  Peyto ExplorationDevel

Very good diversification

The 3 months correlation between United and Peyto is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Peyto ExplorationDevelopment C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peyto ExplorationDevel 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 Peyto ExplorationDevel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peyto ExplorationDevel has no effect on the direction of United Rentals i.e., United Rentals and Peyto ExplorationDevel go up and down completely randomly.

Pair Corralation between United Rentals and Peyto ExplorationDevel

Considering the 90-day investment horizon United Rentals is expected to under-perform the Peyto ExplorationDevel. In addition to that, United Rentals is 1.35 times more volatile than Peyto ExplorationDevelopment Corp. It trades about -0.23 of its total potential returns per unit of risk. Peyto ExplorationDevelopment Corp is currently generating about 0.01 per unit of volatility. If you would invest  1,593  in Peyto ExplorationDevelopment Corp on December 1, 2024 and sell it today you would lose (1.00) from holding Peyto ExplorationDevelopment Corp or give up 0.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

United Rentals  vs.  Peyto ExplorationDevelopment C

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 uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Peyto ExplorationDevel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peyto ExplorationDevelopment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Peyto ExplorationDevel is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with United Rentals and Peyto ExplorationDevel

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

The idea behind United Rentals and Peyto ExplorationDevelopment 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 Transaction History module to view history of all your transactions and understand their impact on performance.