Correlation Between Iron Mountain and United Rentals
Can any of the company-specific risk be diversified away by investing in both Iron Mountain 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 Iron Mountain and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Mountain Incorporated and United Rentals, you can compare the effects of market volatilities on Iron Mountain 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 Iron Mountain with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Mountain and United Rentals.
Diversification Opportunities for Iron Mountain and United Rentals
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Iron and United is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain Incorporated and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Iron Mountain 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 Iron Mountain Incorporated 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 Iron Mountain i.e., Iron Mountain and United Rentals go up and down completely randomly.
Pair Corralation between Iron Mountain and United Rentals
Assuming the 90 days trading horizon Iron Mountain is expected to generate 2.92 times less return on investment than United Rentals. But when comparing it to its historical volatility, Iron Mountain Incorporated is 1.26 times less risky than United Rentals. It trades about 0.06 of its potential returns per unit of risk. United Rentals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 14,304 in United Rentals on September 12, 2024 and sell it today you would earn a total of 2,976 from holding United Rentals or generate 20.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Iron Mountain Incorporated vs. United Rentals
Performance |
Timeline |
Iron Mountain |
United Rentals |
Iron Mountain and United Rentals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Iron Mountain and United Rentals
The main advantage of trading using opposite Iron Mountain and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Mountain 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.Iron Mountain vs. Equinix | Iron Mountain vs. Fundo Investimento Imobiliario | Iron Mountain vs. LESTE FDO INV | Iron Mountain vs. Fras le SA |
United Rentals vs. Localiza Rent a | United Rentals vs. Movida Participaes SA | United Rentals vs. Fundo Investimento Imobiliario | United Rentals vs. LESTE FDO INV |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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