Correlation Between United Rentals and SYSCO

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

By analyzing existing cross correlation between United Rentals and SYSCO P 5375, you can compare the effects of market volatilities on United Rentals and SYSCO 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 SYSCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and SYSCO.

Diversification Opportunities for United Rentals and SYSCO

-0.45

Correlation Coefficient

United Rentals  SYSCO

Very good diversification

The 3 months correlation between United and SYSCO is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and SYSCO P 5375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSCO P 5375 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 SYSCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSCO P 5375 has no effect on the direction of United Rentals i.e., United Rentals and SYSCO go up and down completely randomly.

Pair Corralation between United Rentals and SYSCO

Considering the 90-day investment horizon United Rentals is expected to under-perform the SYSCO. In addition to that, United Rentals is 4.17 times more volatile than SYSCO P 5375. It trades about -0.05 of its total potential returns per unit of risk. SYSCO P 5375 is currently generating about -0.05 per unit of volatility. If you would invest  10,140  in SYSCO P 5375 on December 28, 2024 and sell it today you would lose (157.00) from holding SYSCO P 5375 or give up 1.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.0%
Values	Daily Returns

United Rentals  vs.  SYSCO P 5375

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.

SYSCO P 5375

Risk-Adjusted Performance

Very Weak

Over the last 90 days SYSCO P 5375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SYSCO is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Rentals and SYSCO

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

The idea behind United Rentals and SYSCO P 5375 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.