Correlation Between BOC Aviation and United Rentals
Can any of the company-specific risk be diversified away by investing in both BOC Aviation and United Rentals 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 BOC Aviation and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOC Aviation Limited and United Rentals, you can compare the effects of market volatilities on BOC Aviation and United Rentals 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 BOC Aviation with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOC Aviation and United Rentals.
Diversification Opportunities for BOC Aviation and United Rentals
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BOC and United is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding BOC Aviation Limited and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and BOC Aviation 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 BOC Aviation Limited are associated (or correlated) with United Rentals. 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 has no effect on the direction of BOC Aviation i.e., BOC Aviation and United Rentals go up and down completely randomly.
Pair Corralation between BOC Aviation and United Rentals
Assuming the 90 days horizon BOC Aviation Limited is expected to under-perform the United Rentals. In addition to that, BOC Aviation is 1.39 times more volatile than United Rentals. It trades about -0.06 of its total potential returns per unit of risk. United Rentals is currently generating about 0.19 per unit of volatility. If you would invest 69,621 in United Rentals on September 5, 2024 and sell it today you would earn a total of 17,203 from holding United Rentals or generate 24.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 98.46% |
Values | Daily Returns |
BOC Aviation Limited vs. United Rentals
Performance |
Timeline |
BOC Aviation Limited |
United Rentals |
BOC Aviation and United Rentals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BOC Aviation and United Rentals
The main advantage of trading using opposite BOC Aviation and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOC Aviation position performs unexpectedly, United Rentals 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 Rentals will offset losses from the drop in United Rentals' long position.BOC Aviation vs. United Rentals | BOC Aviation vs. Ashtead Gro | BOC Aviation vs. Ashtead Group plc | BOC Aviation vs. AerCap Holdings NV |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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