Correlation Between United Rentals and Pro Blend

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Can any of the company-specific risk be diversified away by investing in both United Rentals and Pro Blend 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 Pro Blend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Pro Blend Maximum Term, you can compare the effects of market volatilities on United Rentals and Pro Blend 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 Pro Blend. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Pro Blend.

Diversification Opportunities for United Rentals and Pro Blend

UnitedProDiversified AwayUnitedProDiversified Away100%
0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between United and Pro is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Pro Blend Maximum Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Blend Maximum 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 Pro Blend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Blend Maximum has no effect on the direction of United Rentals i.e., United Rentals and Pro Blend go up and down completely randomly.

Pair Corralation between United Rentals and Pro Blend

Considering the 90-day investment horizon United Rentals is expected to generate 3.72 times more return on investment than Pro Blend. However, United Rentals is 3.72 times more volatile than Pro Blend Maximum Term. It trades about 0.08 of its potential returns per unit of risk. Pro Blend Maximum Term is currently generating about 0.14 per unit of risk. If you would invest  72,810  in United Rentals on September 13, 2024 and sell it today you would earn a total of  6,887  from holding United Rentals or generate 9.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.44%
ValuesDaily Returns

United Rentals  vs.  Pro Blend Maximum Term

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 510152025
JavaScript chart by amCharts 3.21.15URI MNHIX
       Timeline  
United Rentals 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 6 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec760780800820840860880900
Pro Blend Maximum 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Pro Blend Maximum Term are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Pro Blend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec26.426.626.82727.227.427.627.8

United Rentals and Pro Blend Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.13-4.59-3.05-1.510.01.573.194.826.448.06 0.20.40.60.81.01.21.4
JavaScript chart by amCharts 3.21.15URI MNHIX
       Returns  

Pair Trading with United Rentals and Pro Blend

The main advantage of trading using opposite United Rentals and Pro Blend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Pro Blend 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 Pro Blend will offset losses from the drop in Pro Blend's long position.
The idea behind United Rentals and Pro Blend Maximum Term 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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