Correlation Between United Rentals and Darden Restaurants
Can any of the company-specific risk be diversified away by investing in both United Rentals and Darden Restaurants 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 Darden Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Darden Restaurants, you can compare the effects of market volatilities on United Rentals and Darden Restaurants 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 Darden Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Darden Restaurants.
Diversification Opportunities for United Rentals and Darden Restaurants
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Darden is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants 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 Darden Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darden Restaurants has no effect on the direction of United Rentals i.e., United Rentals and Darden Restaurants go up and down completely randomly.
Pair Corralation between United Rentals and Darden Restaurants
Assuming the 90 days horizon United Rentals is expected to under-perform the Darden Restaurants. In addition to that, United Rentals is 1.01 times more volatile than Darden Restaurants. It trades about -0.01 of its total potential returns per unit of risk. Darden Restaurants is currently generating about 0.09 per unit of volatility. If you would invest 15,468 in Darden Restaurants on September 24, 2024 and sell it today you would earn a total of 2,067 from holding Darden Restaurants or generate 13.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
United Rentals vs. Darden Restaurants
Performance |
Timeline |
United Rentals |
Darden Restaurants |
United Rentals and Darden Restaurants Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and Darden Restaurants
The main advantage of trading using opposite United Rentals and Darden Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Darden Restaurants 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 Darden Restaurants will offset losses from the drop in Darden Restaurants' long position.United Rentals vs. Suntory Beverage Food | United Rentals vs. CHIBA BANK | United Rentals vs. ALIOR BANK | United Rentals vs. TFS FINANCIAL |
Darden Restaurants vs. United Rentals | Darden Restaurants vs. GAMESTOP | Darden Restaurants vs. Games Workshop Group | Darden Restaurants vs. Global Ship Lease |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
CEOs Directory Screen CEOs from public companies around the world | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |