Correlation Between United Rentals and Columbia Select
Can any of the company-specific risk be diversified away by investing in both United Rentals and Columbia Select 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 Columbia Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Columbia Select Large, you can compare the effects of market volatilities on United Rentals and Columbia Select 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 Columbia Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Columbia Select.
Diversification Opportunities for United Rentals and Columbia Select
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and Columbia is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Columbia Select Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Select Large 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 Columbia Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Select Large has no effect on the direction of United Rentals i.e., United Rentals and Columbia Select go up and down completely randomly.
Pair Corralation between United Rentals and Columbia Select
Considering the 90-day investment horizon United Rentals is expected to generate 2.91 times more return on investment than Columbia Select. However, United Rentals is 2.91 times more volatile than Columbia Select Large. It trades about 0.09 of its potential returns per unit of risk. Columbia Select Large is currently generating about 0.12 per unit of risk. If you would invest 37,999 in United Rentals on September 6, 2024 and sell it today you would earn a total of 48,825 from holding United Rentals or generate 128.49% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
United Rentals vs. Columbia Select Large
Performance |
Timeline |
United Rentals |
Columbia Select Large |
United Rentals and Columbia Select Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and Columbia Select
The main advantage of trading using opposite United Rentals and Columbia Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Columbia Select 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 Columbia Select will offset losses from the drop in Columbia Select's long position.United Rentals vs. HE Equipment Services | United Rentals vs. GATX Corporation | United Rentals vs. McGrath RentCorp | United Rentals vs. Alta Equipment Group |
Columbia Select vs. Columbia Large Cap | Columbia Select vs. Columbia Small Cap | Columbia Select vs. Columbia Large Cap | Columbia Select vs. Columbia Mid Cap |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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