Correlation Between Axcelis Technologies and UNITED RENTALS

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

By analyzing existing cross correlation between Axcelis Technologies and UNITED RENTALS, you can compare the effects of market volatilities on Axcelis Technologies 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 Axcelis Technologies with a short position of UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axcelis Technologies and UNITED RENTALS.

Diversification Opportunities for Axcelis Technologies and UNITED RENTALS

-0.23

Correlation Coefficient

Axcelis Technologies  UNITED RENTALS

Very good diversification

The 3 months correlation between Axcelis and UNITED is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Axcelis Technologies and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS and Axcelis Technologies 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 Axcelis Technologies 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 Axcelis Technologies i.e., Axcelis Technologies and UNITED RENTALS go up and down completely randomly.

Pair Corralation between Axcelis Technologies and UNITED RENTALS

Assuming the 90 days trading horizon Axcelis Technologies is expected to under-perform the UNITED RENTALS. In addition to that, Axcelis Technologies is 1.28 times more volatile than UNITED RENTALS. It trades about -0.08 of its total potential returns per unit of risk. UNITED RENTALS is currently generating about -0.07 per unit of volatility. If you would invest  71,716  in UNITED RENTALS on October 6, 2024 and sell it today you would lose (4,956) from holding UNITED RENTALS or give up 6.91% of portfolio value over 90 days.

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

Axcelis Technologies  vs.  UNITED RENTALS

Axcelis Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axcelis Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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. In spite of rather sound basic indicators, UNITED RENTALS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Axcelis Technologies and UNITED RENTALS

The main advantage of trading using opposite Axcelis Technologies and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axcelis Technologies 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's long position.

The idea behind Axcelis Technologies 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 Transaction History module to view history of all your transactions and understand their impact on performance.