Correlation Between United Rentals and Pacific Funds

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

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

Diversification Opportunities for United Rentals and Pacific Funds

0.72

Correlation Coefficient

United Rentals  Pacific Funds

Poor diversification

The 3 months correlation between United and Pacific is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Pacific Funds Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Floating 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 Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Floating has no effect on the direction of United Rentals i.e., United Rentals and Pacific Funds go up and down completely randomly.

Pair Corralation between United Rentals and Pacific Funds

Considering the 90-day investment horizon United Rentals is expected to under-perform the Pacific Funds. In addition to that, United Rentals is 9.76 times more volatile than Pacific Funds Floating. It trades about -0.38 of its total potential returns per unit of risk. Pacific Funds Floating is currently generating about 0.1 per unit of volatility. If you would invest  949.00  in Pacific Funds Floating on January 24, 2024 and sell it today you would earn a total of  3.00  from holding Pacific Funds Floating or generate 0.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

United Rentals  vs.  Pacific Funds Floating

United Rentals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, United Rentals may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pacific Funds Floating

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Funds Floating are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pacific Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Rentals and Pacific Funds

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

The idea behind United Rentals and Pacific Funds Floating 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.