Correlation Between United Rentals and Trisura

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

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

Diversification Opportunities for United Rentals and Trisura

0.43

Correlation Coefficient

United Rentals  Trisura

Very weak diversification

The 3 months correlation between United and Trisura is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Trisura Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trisura Group 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 Trisura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trisura Group has no effect on the direction of United Rentals i.e., United Rentals and Trisura go up and down completely randomly.

Pair Corralation between United Rentals and Trisura

Considering the 90-day investment horizon United Rentals is expected to generate 1.2 times more return on investment than Trisura. However, United Rentals is 1.2 times more volatile than Trisura Group. It trades about -0.07 of its potential returns per unit of risk. Trisura Group is currently generating about -0.12 per unit of risk. If you would invest  72,438  in United Rentals on December 26, 2024 and sell it today you would lose (8,274) from holding United Rentals or give up 11.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

United Rentals  vs.  Trisura Group

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.

Trisura Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trisura Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with United Rentals and Trisura

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

The idea behind United Rentals and Trisura Group 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.