Correlation Between United Rentals and Parker Hannifin
Can any of the company-specific risk be diversified away by investing in both United Rentals and Parker Hannifin 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 Parker Hannifin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Parker Hannifin, you can compare the effects of market volatilities on United Rentals and Parker Hannifin 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 Parker Hannifin. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Parker Hannifin.
Diversification Opportunities for United Rentals and Parker Hannifin
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between United and Parker is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Parker Hannifin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parker Hannifin 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 Parker Hannifin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parker Hannifin has no effect on the direction of United Rentals i.e., United Rentals and Parker Hannifin go up and down completely randomly.
Pair Corralation between United Rentals and Parker Hannifin
Considering the 90-day investment horizon United Rentals is expected to generate 1.29 times less return on investment than Parker Hannifin. In addition to that, United Rentals is 1.7 times more volatile than Parker Hannifin. It trades about 0.07 of its total potential returns per unit of risk. Parker Hannifin is currently generating about 0.15 per unit of volatility. If you would invest 47,216 in Parker Hannifin on January 21, 2024 and sell it today you would earn a total of 6,249 from holding Parker Hannifin or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Parker Hannifin
Performance |
| Timeline |
| United Rentals |
| Parker Hannifin |
United Rentals and Parker Hannifin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Parker Hannifin
The main advantage of trading using opposite United Rentals and Parker Hannifin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Parker Hannifin 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 Parker Hannifin will offset losses from the drop in Parker Hannifin's long position.| United Rentals vs. Ryder System | United Rentals vs. Avis Budget Group | United Rentals vs. FlexShopper | United Rentals vs. Global Ship Lease |
| Parker Hannifin vs. Emerson Electric | Parker Hannifin vs. Smith AO | Parker Hannifin vs. Eaton PLC | Parker Hannifin vs. Cummins |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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