Correlation Between ASTELLAS PHARMA and UNITED RENTALS

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

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

Diversification Opportunities for ASTELLAS PHARMA and UNITED RENTALS

0.26

Correlation Coefficient

ASTELLAS PHARMA  UNITED RENTALS

Modest diversification

The 3 months correlation between ASTELLAS and UNITED is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ASTELLAS PHARMA UNSPADR and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS and ASTELLAS PHARMA 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 ASTELLAS PHARMA UNSPADR 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 ASTELLAS PHARMA i.e., ASTELLAS PHARMA and UNITED RENTALS go up and down completely randomly.

Pair Corralation between ASTELLAS PHARMA and UNITED RENTALS

Assuming the 90 days trading horizon ASTELLAS PHARMA UNSPADR is expected to generate 0.56 times more return on investment than UNITED RENTALS. However, ASTELLAS PHARMA UNSPADR is 1.78 times less risky than UNITED RENTALS. It trades about 0.0 of its potential returns per unit of risk. UNITED RENTALS is currently generating about -0.12 per unit of risk. If you would invest  895.00  in ASTELLAS PHARMA UNSPADR on December 23, 2024 and sell it today you would lose (5.00) from holding ASTELLAS PHARMA UNSPADR or give up 0.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ASTELLAS PHARMA UNSPADR  vs.  UNITED RENTALS

ASTELLAS PHARMA UNSPADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASTELLAS PHARMA UNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, ASTELLAS PHARMA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with ASTELLAS PHARMA and UNITED RENTALS

The main advantage of trading using opposite ASTELLAS PHARMA and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASTELLAS PHARMA 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 ASTELLAS PHARMA UNSPADR 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.