Correlation Between Minor International and United Rentals

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

By analyzing existing cross correlation between Minor International PCL and United Rentals, you can compare the effects of market volatilities on Minor International 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 Minor International with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minor International and United Rentals.

Diversification Opportunities for Minor International and United Rentals

0.06

Correlation Coefficient

Minor International  United Rentals

Significant diversification

The 3 months correlation between Minor and United is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Minor International PCL and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Minor International 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 Minor International PCL 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 Minor International i.e., Minor International and United Rentals go up and down completely randomly.

Pair Corralation between Minor International and United Rentals

If you would invest  72,810  in United Rentals on September 13, 2024 and sell it today you would earn a total of  5,849  from holding United Rentals or generate 8.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Minor International PCL  vs.  United Rentals

Minor International PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minor International PCL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Minor International is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

United Rentals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, United Rentals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Minor International and United Rentals

The main advantage of trading using opposite Minor International and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minor International 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.

The idea behind Minor International PCL 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.