Correlation Between United Rentals and India Closed

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

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

Diversification Opportunities for United Rentals and India Closed

-0.27

Correlation Coefficient

United Rentals  India Closed

Very good diversification

The 3 months correlation between United and India is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and India Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on India Closed 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 India Closed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of India Closed has no effect on the direction of United Rentals i.e., United Rentals and India Closed go up and down completely randomly.

Pair Corralation between United Rentals and India Closed

Considering the 90-day investment horizon United Rentals is expected to generate 1.95 times more return on investment than India Closed. However, United Rentals is 1.95 times more volatile than India Closed. It trades about 0.1 of its potential returns per unit of risk. India Closed is currently generating about -0.02 per unit of risk. If you would invest  71,129  in United Rentals on September 12, 2024 and sell it today you would earn a total of  8,568  from holding United Rentals or generate 12.05% return on investment over 90 days.

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

United Rentals  vs.  India Closed

United Rentals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 7 (%) 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.

India Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days India Closed has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy technical and fundamental indicators, India Closed is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with United Rentals and India Closed

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

The idea behind United Rentals and India Closed 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.