Correlation Between United Rentals and Citigroup
Can any of the company-specific risk be diversified away by investing in both United Rentals and Citigroup 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 Citigroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Citigroup, you can compare the effects of market volatilities on United Rentals and Citigroup 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 Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Citigroup.
Diversification Opportunities for United Rentals and Citigroup
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Citigroup is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of United Rentals i.e., United Rentals and Citigroup go up and down completely randomly.
Pair Corralation between United Rentals and Citigroup
Considering the 90-day investment horizon United Rentals is expected to generate 1.33 times more return on investment than Citigroup. However, United Rentals is 1.33 times more volatile than Citigroup. It trades about 0.08 of its potential returns per unit of risk. Citigroup is currently generating about 0.04 per unit of risk. If you would invest 29,062 in United Rentals on January 26, 2024 and sell it today you would earn a total of 36,457 from holding United Rentals or generate 125.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.8% |
Values | Daily Returns |
United Rentals vs. Citigroup
Performance |
Timeline |
United Rentals |
Citigroup |
United Rentals and Citigroup Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and Citigroup
The main advantage of trading using opposite United Rentals and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.United Rentals vs. Ryder System | United Rentals vs. Vestis | United Rentals vs. Willis Lease Finance | United Rentals vs. AerCap Holdings NV |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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