Correlation Between Fonar and United

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

By analyzing existing cross correlation between Fonar and United Rentals 525, you can compare the effects of market volatilities on Fonar and United 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 Fonar with a short position of United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fonar and United.

Diversification Opportunities for Fonar and United

0.35

Correlation Coefficient

Fonar  United

Weak diversification

The 3 months correlation between Fonar and United is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fonar and United Rentals 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals 525 and Fonar 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 Fonar are associated (or correlated) with United. 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 525 has no effect on the direction of Fonar i.e., Fonar and United go up and down completely randomly.

Pair Corralation between Fonar and United

Given the investment horizon of 90 days Fonar is expected to under-perform the United. In addition to that, Fonar is 6.3 times more volatile than United Rentals 525. It trades about -0.68 of its total potential returns per unit of risk. United Rentals 525 is currently generating about -0.38 per unit of volatility. If you would invest  9,765  in United Rentals 525 on January 25, 2024 and sell it today you would lose (244.00) from holding United Rentals 525 or give up 2.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Fonar  vs.  United Rentals 525

Fonar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fonar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

United Rentals 525

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Rentals 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, United is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fonar and United

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

The idea behind Fonar and United Rentals 525 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.