Correlation Between United Rentals and Boeing
Can any of the company-specific risk be diversified away by investing in both United Rentals and Boeing 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 Boeing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and The Boeing, you can compare the effects of market volatilities on United Rentals and Boeing 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 Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Boeing.
Diversification Opportunities for United Rentals and Boeing
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Boeing is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing 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 Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of United Rentals i.e., United Rentals and Boeing go up and down completely randomly.
Pair Corralation between United Rentals and Boeing
Considering the 90-day investment horizon United Rentals is expected to generate 1.58 times more return on investment than Boeing. However, United Rentals is 1.58 times more volatile than The Boeing. It trades about -0.15 of its potential returns per unit of risk. The Boeing is currently generating about -0.49 per unit of risk. If you would invest 70,444 in United Rentals on January 25, 2024 and sell it today you would lose (4,312) from holding United Rentals or give up 6.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. The Boeing
Performance |
| Timeline |
| United Rentals |
| Boeing |
United Rentals and Boeing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Boeing
The main advantage of trading using opposite United Rentals and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.| United Rentals vs. The Aarons | United Rentals vs. McGrath RentCorp | United Rentals vs. PROG Holdings | United Rentals vs. Ryder System |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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