Correlation Between United Rentals and Sp Midcap
Can any of the company-specific risk be diversified away by investing in both United Rentals and Sp Midcap 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 Sp Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Sp Midcap 400, you can compare the effects of market volatilities on United Rentals and Sp Midcap 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 Sp Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Sp Midcap.
Diversification Opportunities for United Rentals and Sp Midcap
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and RYBHX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Sp Midcap 400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Midcap 400 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 Sp Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Midcap 400 has no effect on the direction of United Rentals i.e., United Rentals and Sp Midcap go up and down completely randomly.
Pair Corralation between United Rentals and Sp Midcap
Considering the 90-day investment horizon United Rentals is expected to generate 1.76 times more return on investment than Sp Midcap. However, United Rentals is 1.76 times more volatile than Sp Midcap 400. It trades about 0.05 of its potential returns per unit of risk. Sp Midcap 400 is currently generating about 0.03 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. Sp Midcap 400
Performance |
Timeline |
United Rentals |
Sp Midcap 400 |
United Rentals and Sp Midcap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and Sp Midcap
The main advantage of trading using opposite United Rentals and Sp Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Sp Midcap 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 Sp Midcap will offset losses from the drop in Sp Midcap'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 |
Sp Midcap vs. Sp Smallcap 600 | Sp Midcap vs. Sp 500 Pure | Sp Midcap vs. Sp Midcap 400 | Sp Midcap vs. Sp Smallcap 600 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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