Correlation Between United Rentals and Anritsu

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

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

Diversification Opportunities for United Rentals and Anritsu

0.22

Correlation Coefficient

United Rentals  Anritsu

Modest diversification

The 3 months correlation between United and Anritsu is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Anritsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anritsu 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 Anritsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anritsu has no effect on the direction of United Rentals i.e., United Rentals and Anritsu go up and down completely randomly.

Pair Corralation between United Rentals and Anritsu

Considering the 90-day investment horizon United Rentals is expected to under-perform the Anritsu. In addition to that, United Rentals is 1.99 times more volatile than Anritsu. It trades about -0.14 of its total potential returns per unit of risk. Anritsu is currently generating about -0.27 per unit of volatility. If you would invest  665.00  in Anritsu on March 7, 2024 and sell it today you would lose (40.00) from holding Anritsu or give up 6.02% of portfolio value over 90 days.

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

United Rentals  vs.  Anritsu

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 fairly strong basic indicators, United Rentals is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Anritsu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anritsu has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with United Rentals and Anritsu

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

The idea behind United Rentals and Anritsu 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.