Correlation Between United Rentals and Virtus International

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

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

Diversification Opportunities for United Rentals and Virtus International

-0.31

Correlation Coefficient

United Rentals  Virtus International

Very good diversification

The 3 months correlation between United and Virtus is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Virtus International Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus International 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 Virtus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus International has no effect on the direction of United Rentals i.e., United Rentals and Virtus International go up and down completely randomly.

Pair Corralation between United Rentals and Virtus International

Considering the 90-day investment horizon United Rentals is expected to under-perform the Virtus International. In addition to that, United Rentals is 1.99 times more volatile than Virtus International Small Cap. It trades about -0.06 of its total potential returns per unit of risk. Virtus International Small Cap is currently generating about 0.12 per unit of volatility. If you would invest  1,956  in Virtus International Small Cap on September 9, 2024 and sell it today you would earn a total of  30.00  from holding Virtus International Small Cap or generate 1.53% 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.  Virtus International Small Cap

United Rentals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, United Rentals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Virtus International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus International Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Virtus International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Rentals and Virtus International

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

The idea behind United Rentals and Virtus International Small Cap 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.