Correlation Between United Rentals and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both United Rentals and CNH Industrial 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 CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and CNH Industrial NV, you can compare the effects of market volatilities on United Rentals and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and CNH Industrial.
Diversification Opportunities for United Rentals and CNH Industrial
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and CNH is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV 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 CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of United Rentals i.e., United Rentals and CNH Industrial go up and down completely randomly.
Pair Corralation between United Rentals and CNH Industrial
Considering the 90-day investment horizon United Rentals is expected to generate 0.81 times more return on investment than CNH Industrial. However, United Rentals is 1.24 times less risky than CNH Industrial. It trades about 0.09 of its potential returns per unit of risk. CNH Industrial NV is currently generating about -0.01 per unit of risk. If you would invest 34,927 in United Rentals on September 5, 2024 and sell it today you would earn a total of 51,975 from holding United Rentals or generate 148.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 93.94% |
Values | Daily Returns |
United Rentals vs. CNH Industrial NV
Performance |
Timeline |
United Rentals |
CNH Industrial NV |
United Rentals and CNH Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and CNH Industrial
The main advantage of trading using opposite United Rentals and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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