Correlation Between United Rentals and Victory Bancorp

Can any of the company-specific risk be diversified away by investing in both United Rentals and Victory Bancorp 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 Victory Bancorp 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 Victory Bancorp, you can compare the effects of market volatilities on United Rentals and Victory Bancorp 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 Victory Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Victory Bancorp.

Diversification Opportunities for United Rentals and Victory Bancorp

-0.31

Correlation Coefficient

United Rentals  Victory Bancorp

Very good diversification

The 3 months correlation between United and Victory is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and The Victory Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Bancorp 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 Victory Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Bancorp has no effect on the direction of United Rentals i.e., United Rentals and Victory Bancorp go up and down completely randomly.

Pair Corralation between United Rentals and Victory Bancorp

Considering the 90-day investment horizon United Rentals is expected to generate 1.47 times more return on investment than Victory Bancorp. However, United Rentals is 1.47 times more volatile than The Victory Bancorp. It trades about -0.02 of its potential returns per unit of risk. The Victory Bancorp is currently generating about -0.2 per unit of risk. If you would invest  67,079  in United Rentals on January 25, 2024 and sell it today you would lose (1,560) from holding United Rentals or give up 2.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

United Rentals  vs.  The Victory Bancorp

United Rentals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, United Rentals is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Victory Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Victory Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with United Rentals and Victory Bancorp

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

The idea behind United Rentals and The Victory Bancorp 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.