Correlation Between United Rentals and High Yield
Can any of the company-specific risk be diversified away by investing in both United Rentals and High Yield 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 High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and High Yield Bond, you can compare the effects of market volatilities on United Rentals and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and High Yield.
Diversification Opportunities for United Rentals and High Yield
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and High is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and High Yield Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Bond 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Bond has no effect on the direction of United Rentals i.e., United Rentals and High Yield go up and down completely randomly.
Pair Corralation between United Rentals and High Yield
Considering the 90-day investment horizon United Rentals is expected to generate 12.47 times more return on investment than High Yield. However, United Rentals is 12.47 times more volatile than High Yield Bond. It trades about 0.19 of its potential returns per unit of risk. High Yield Bond is currently generating about 0.17 per unit of risk. If you would invest 69,463 in United Rentals on September 9, 2024 and sell it today you would earn a total of 16,429 from holding United Rentals or generate 23.65% 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. High Yield Bond
Performance |
Timeline |
United Rentals |
High Yield Bond |
United Rentals and High Yield Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and High Yield
The main advantage of trading using opposite United Rentals and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.United Rentals vs. McGrath RentCorp | United Rentals vs. Herc Holdings | United Rentals vs. PROG Holdings | United Rentals vs. Ryder System |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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