Correlation Between United Rentals and Thompson Largecap

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

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

Diversification Opportunities for United Rentals and Thompson Largecap

0.66

Correlation Coefficient

United Rentals  Thompson Largecap

Poor diversification

The 3 months correlation between United and Thompson is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Thompson Largecap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thompson Largecap 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 Thompson Largecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thompson Largecap has no effect on the direction of United Rentals i.e., United Rentals and Thompson Largecap go up and down completely randomly.

Pair Corralation between United Rentals and Thompson Largecap

Considering the 90-day investment horizon United Rentals is expected to under-perform the Thompson Largecap. In addition to that, United Rentals is 2.59 times more volatile than Thompson Largecap Fund. It trades about -0.05 of its total potential returns per unit of risk. Thompson Largecap Fund is currently generating about 0.0 per unit of volatility. If you would invest  9,972  in Thompson Largecap Fund on December 29, 2024 and sell it today you would lose (25.00) from holding Thompson Largecap Fund or give up 0.25% of portfolio value over 90 days.

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

United Rentals  vs.  Thompson Largecap Fund

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 latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Thompson Largecap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thompson Largecap Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Thompson Largecap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Rentals and Thompson Largecap

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

The idea behind United Rentals and Thompson Largecap Fund 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..