Correlation Between United Rentals and Calvert Equity

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

By analyzing existing cross correlation between United Rentals and Calvert Equity Fund, you can compare the effects of market volatilities on United Rentals and Calvert Equity 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 Calvert Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Calvert Equity.

Diversification Opportunities for United Rentals and Calvert Equity

0.57

Correlation Coefficient

United Rentals  Calvert Equity

Very weak diversification

The 3 months correlation between United and Calvert is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Calvert Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Equity 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 Calvert Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Equity has no effect on the direction of United Rentals i.e., United Rentals and Calvert Equity go up and down completely randomly.

Pair Corralation between United Rentals and Calvert Equity

Considering the 90-day investment horizon United Rentals is expected to generate 3.23 times more return on investment than Calvert Equity. However, United Rentals is 3.23 times more volatile than Calvert Equity Fund. It trades about 0.18 of its potential returns per unit of risk. Calvert Equity Fund is currently generating about 0.08 per unit of risk. If you would invest  70,053  in United Rentals on September 3, 2024 and sell it today you would earn a total of  16,547  from holding United Rentals or generate 23.62% 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.  Calvert Equity Fund

United Rentals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, United Rentals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Calvert Equity

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Equity Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Calvert Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Rentals and Calvert Equity

The main advantage of trading using opposite United Rentals and Calvert Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Calvert Equity 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 Calvert Equity will offset losses from the drop in Calvert Equity's long position.

The idea behind United Rentals and Calvert Equity Fund 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.