Correlation Between United Rentals and Malacca Straits
Can any of the company-specific risk be diversified away by investing in both United Rentals and Malacca Straits 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 Malacca Straits into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Malacca Straits Acquisition, you can compare the effects of market volatilities on United Rentals and Malacca Straits 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 Malacca Straits. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Malacca Straits.
Diversification Opportunities for United Rentals and Malacca Straits
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Malacca is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Malacca Straits Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malacca Straits Acqu 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 Malacca Straits. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malacca Straits Acqu has no effect on the direction of United Rentals i.e., United Rentals and Malacca Straits go up and down completely randomly.
Pair Corralation between United Rentals and Malacca Straits
Considering the 90-day investment horizon United Rentals is expected to generate 25.58 times less return on investment than Malacca Straits. But when comparing it to its historical volatility, United Rentals is 20.23 times less risky than Malacca Straits. It trades about 0.09 of its potential returns per unit of risk. Malacca Straits Acquisition is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Malacca Straits Acquisition on September 7, 2024 and sell it today you would lose (1.86) from holding Malacca Straits Acquisition or give up 93.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 16.6% |
Values | Daily Returns |
United Rentals vs. Malacca Straits Acquisition
Performance |
Timeline |
United Rentals |
Malacca Straits Acqu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
United Rentals and Malacca Straits Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and Malacca Straits
The main advantage of trading using opposite United Rentals and Malacca Straits positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Malacca Straits 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 Malacca Straits will offset losses from the drop in Malacca Straits' long position.United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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