Correlation Between United Rentals and Red Moon
Can any of the company-specific risk be diversified away by investing in both United Rentals and Red Moon 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 Red Moon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Red Moon Resources, you can compare the effects of market volatilities on United Rentals and Red Moon 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 Red Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Red Moon.
Diversification Opportunities for United Rentals and Red Moon
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Red is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Red Moon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Moon Resources 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 Red Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Moon Resources has no effect on the direction of United Rentals i.e., United Rentals and Red Moon go up and down completely randomly.
Pair Corralation between United Rentals and Red Moon
Considering the 90-day investment horizon United Rentals is expected to generate 0.55 times more return on investment than Red Moon. However, United Rentals is 1.83 times less risky than Red Moon. It trades about 0.05 of its potential returns per unit of risk. Red Moon Resources is currently generating about -0.02 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 Against |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
United Rentals vs. Red Moon Resources
Performance |
Timeline |
United Rentals |
Red Moon Resources |
United Rentals and Red Moon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and Red Moon
The main advantage of trading using opposite United Rentals and Red Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Red Moon 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 Red Moon will offset losses from the drop in Red Moon's long position.United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
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Check out your portfolio center.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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