Correlation Between Lendlease and UNITED RENTALS

Can any of the company-specific risk be diversified away by investing in both Lendlease 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 Lendlease and UNITED RENTALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lendlease Group and UNITED RENTALS, you can compare the effects of market volatilities on Lendlease 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 Lendlease with a short position of UNITED RENTALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and UNITED RENTALS.

Diversification Opportunities for Lendlease and UNITED RENTALS

-0.15

Correlation Coefficient

Lendlease  UNITED RENTALS

Good diversification

The 3 months correlation between Lendlease and UNITED is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and UNITED RENTALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED RENTALS and Lendlease 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 Lendlease Group 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 Lendlease i.e., Lendlease and UNITED RENTALS go up and down completely randomly.

Pair Corralation between Lendlease and UNITED RENTALS

Assuming the 90 days trading horizon Lendlease is expected to generate 2.38 times less return on investment than UNITED RENTALS. But when comparing it to its historical volatility, Lendlease Group is 1.4 times less risky than UNITED RENTALS. It trades about 0.09 of its potential returns per unit of risk. UNITED RENTALS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  66,407  in UNITED RENTALS on September 3, 2024 and sell it today you would earn a total of  14,313  from holding UNITED RENTALS or generate 21.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lendlease Group  vs.  UNITED RENTALS

Lendlease Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lendlease Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lendlease may actually be approaching a critical reversion point that can send shares even higher in January 2025.

UNITED RENTALS

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED RENTALS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, UNITED RENTALS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lendlease and UNITED RENTALS

The main advantage of trading using opposite Lendlease and UNITED RENTALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease 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's long position.

The idea behind Lendlease Group and UNITED RENTALS 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.