Correlation Between United Rentals and Storebrand Indeks
Can any of the company-specific risk be diversified away by investing in both United Rentals and Storebrand Indeks 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 Storebrand Indeks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Storebrand Indeks , you can compare the effects of market volatilities on United Rentals and Storebrand Indeks 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 Storebrand Indeks. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Storebrand Indeks.
Diversification Opportunities for United Rentals and Storebrand Indeks
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Storebrand is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Storebrand Indeks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Storebrand Indeks 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 Storebrand Indeks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Storebrand Indeks has no effect on the direction of United Rentals i.e., United Rentals and Storebrand Indeks go up and down completely randomly.
Pair Corralation between United Rentals and Storebrand Indeks
Considering the 90-day investment horizon United Rentals is expected to under-perform the Storebrand Indeks. In addition to that, United Rentals is 3.15 times more volatile than Storebrand Indeks . It trades about -0.15 of its total potential returns per unit of risk. Storebrand Indeks is currently generating about -0.24 per unit of volatility. If you would invest 178,920 in Storebrand Indeks on January 24, 2024 and sell it today you would lose (4,940) from holding Storebrand Indeks or give up 2.76% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 90.48% |
Values | Daily Returns |
United Rentals vs. Storebrand Indeks
Performance |
Timeline |
United Rentals |
Storebrand Indeks |
United Rentals and Storebrand Indeks Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and Storebrand Indeks
The main advantage of trading using opposite United Rentals and Storebrand Indeks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Storebrand Indeks 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 Storebrand Indeks will offset losses from the drop in Storebrand Indeks' long position.United Rentals vs. The Aarons | United Rentals vs. McGrath RentCorp | United Rentals vs. PROG Holdings | United Rentals vs. Ryder System |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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