Correlation Between United Rentals and Telia Company
Can any of the company-specific risk be diversified away by investing in both United Rentals and Telia Company 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 Telia Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Telia Company AB, you can compare the effects of market volatilities on United Rentals and Telia Company 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 Telia Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Telia Company.
Diversification Opportunities for United Rentals and Telia Company
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Telia is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company 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 Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of United Rentals i.e., United Rentals and Telia Company go up and down completely randomly.
Pair Corralation between United Rentals and Telia Company
Considering the 90-day investment horizon United Rentals is expected to generate 1.56 times more return on investment than Telia Company. However, United Rentals is 1.56 times more volatile than Telia Company AB. It trades about 0.07 of its potential returns per unit of risk. Telia Company AB is currently generating about -0.09 per unit of risk. If you would invest 57,548 in United Rentals on January 24, 2024 and sell it today you would earn a total of 5,382 from holding United Rentals or generate 9.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United Rentals vs. Telia Company AB
Performance |
Timeline |
United Rentals |
Telia Company |
United Rentals and Telia Company Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and Telia Company
The main advantage of trading using opposite United Rentals and Telia Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Telia Company 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 Telia Company will offset losses from the drop in Telia Company'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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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