Correlation Between United Rentals and Vanguard Long

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

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

Diversification Opportunities for United Rentals and Vanguard Long

-0.56

Correlation Coefficient

United Rentals  Vanguard Long

Excellent diversification

The 3 months correlation between United and Vanguard is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Vanguard Long Term Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Long Term 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 Vanguard Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Long Term has no effect on the direction of United Rentals i.e., United Rentals and Vanguard Long go up and down completely randomly.

Pair Corralation between United Rentals and Vanguard Long

Considering the 90-day investment horizon United Rentals is expected to under-perform the Vanguard Long. In addition to that, United Rentals is 2.52 times more volatile than Vanguard Long Term Porate. It trades about -0.22 of its total potential returns per unit of risk. Vanguard Long Term Porate is currently generating about 0.06 per unit of volatility. If you would invest  2,604  in Vanguard Long Term Porate on September 12, 2024 and sell it today you would earn a total of  21.00  from holding Vanguard Long Term Porate or generate 0.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

United Rentals  vs.  Vanguard Long Term Porate

United Rentals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 7 (%) 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.

Vanguard Long Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Long Term Porate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Vanguard Long 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 Vanguard Long

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

The idea behind United Rentals and Vanguard Long Term Porate 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.