Correlation Between 89788MAL6 and United Rentals

Can any of the company-specific risk be diversified away by investing in both 89788MAL6 and United Rentals 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 89788MAL6 and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TFC 4873 26 JAN 29 and United Rentals, you can compare the effects of market volatilities on 89788MAL6 and United Rentals 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 89788MAL6 with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of 89788MAL6 and United Rentals.

Diversification Opportunities for 89788MAL6 and United Rentals

-0.5

Correlation Coefficient

89788MAL6  United Rentals

Very good diversification

The 3 months correlation between 89788MAL6 and United is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding TFC 4873 26 JAN 29 and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and 89788MAL6 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 TFC 4873 26 JAN 29 are associated (or correlated) with United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of 89788MAL6 i.e., 89788MAL6 and United Rentals go up and down completely randomly.

Pair Corralation between 89788MAL6 and United Rentals

Assuming the 90 days trading horizon TFC 4873 26 JAN 29 is expected to under-perform the United Rentals. But the bond apears to be less risky and, when comparing its historical volatility, TFC 4873 26 JAN 29 is 10.84 times less risky than United Rentals. The bond trades about -0.1 of its potential returns per unit of risk. The United Rentals is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  70,053  in United Rentals on September 2, 2024 and sell it today you would earn a total of  16,547  from holding United Rentals or generate 23.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

TFC 4873 26 JAN 29  vs.  United Rentals

TFC 4873 26

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TFC 4873 26 JAN 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 89788MAL6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

United Rentals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, United Rentals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 89788MAL6 and United Rentals

The main advantage of trading using opposite 89788MAL6 and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 89788MAL6 position performs unexpectedly, United Rentals 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 United Rentals will offset losses from the drop in United Rentals' long position.

The idea behind TFC 4873 26 JAN 29 and United Rentals 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.