Correlation Between United Rentals and 629377CU4

Can any of the company-specific risk be diversified away by investing in both United Rentals and 629377CU4 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 629377CU4 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Rentals and NRG 1025, you can compare the effects of market volatilities on United Rentals and 629377CU4 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 629377CU4. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and 629377CU4.

Diversification Opportunities for United Rentals and 629377CU4

0.25

Correlation Coefficient

United Rentals  629377CU4

Modest diversification

The 3 months correlation between United and 629377CU4 is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and NRG 1025 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 629377CU4 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 629377CU4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 629377CU4 has no effect on the direction of United Rentals i.e., United Rentals and 629377CU4 go up and down completely randomly.

Pair Corralation between United Rentals and 629377CU4

Considering the 90-day investment horizon United Rentals is expected to under-perform the 629377CU4. In addition to that, United Rentals is 1.1 times more volatile than NRG 1025. It trades about -0.13 of its total potential returns per unit of risk. NRG 1025 is currently generating about -0.07 per unit of volatility. If you would invest  11,075  in NRG 1025 on October 6, 2024 and sell it today you would lose (496.00) from holding NRG 1025 or give up 4.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	65.85%
Values	Daily Returns

United Rentals  vs.  NRG 1025

United Rentals

Risk-Adjusted Performance

0 of 100

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 February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

629377CU4

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NRG 1025 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NRG 1025 investors.

Pair Trading with United Rentals and 629377CU4

The main advantage of trading using opposite United Rentals and 629377CU4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, 629377CU4 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 629377CU4 will offset losses from the drop in 629377CU4's long position.

The idea behind United Rentals and NRG 1025 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.