Correlation Between United Rentals and Quantified Market

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

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

Diversification Opportunities for United Rentals and Quantified Market

0.83

Correlation Coefficient

United Rentals  Quantified Market

Very poor diversification

The 3 months correlation between United and Quantified is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Quantified Market Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantified Market Leaders 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 Quantified Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantified Market Leaders has no effect on the direction of United Rentals i.e., United Rentals and Quantified Market go up and down completely randomly.

Pair Corralation between United Rentals and Quantified Market

Considering the 90-day investment horizon United Rentals is expected to generate 1.86 times more return on investment than Quantified Market. However, United Rentals is 1.86 times more volatile than Quantified Market Leaders. It trades about 0.05 of its potential returns per unit of risk. Quantified Market Leaders is currently generating about 0.05 per unit of risk. If you would invest  39,919  in United Rentals on December 2, 2024 and sell it today you would earn a total of  24,313  from holding United Rentals or generate 60.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

United Rentals  vs.  Quantified Market Leaders

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.

Quantified Market Leaders

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quantified Market Leaders has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with United Rentals and Quantified Market

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

The idea behind United Rentals and Quantified Market Leaders 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.