Correlation Between UNITED RENTALS and FORTRESS BIOTECHPRFA

Can any of the company-specific risk be diversified away by investing in both UNITED RENTALS and FORTRESS BIOTECHPRFA 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 FORTRESS BIOTECHPRFA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNITED RENTALS and FORTRESS BIOTECHPRFA 25, you can compare the effects of market volatilities on UNITED RENTALS and FORTRESS BIOTECHPRFA 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 FORTRESS BIOTECHPRFA. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED RENTALS and FORTRESS BIOTECHPRFA.

Diversification Opportunities for UNITED RENTALS and FORTRESS BIOTECHPRFA

0.73

Correlation Coefficient

UNITED RENTALS  FORTRESS BIOTECHPRFA

Poor diversification

The 3 months correlation between UNITED and FORTRESS is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding UNITED RENTALS and FORTRESS BIOTECHPRFA 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORTRESS BIOTECHPRFA 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 FORTRESS BIOTECHPRFA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORTRESS BIOTECHPRFA has no effect on the direction of UNITED RENTALS i.e., UNITED RENTALS and FORTRESS BIOTECHPRFA go up and down completely randomly.

Pair Corralation between UNITED RENTALS and FORTRESS BIOTECHPRFA

Assuming the 90 days trading horizon UNITED RENTALS is expected to generate 0.58 times more return on investment than FORTRESS BIOTECHPRFA. However, UNITED RENTALS is 1.74 times less risky than FORTRESS BIOTECHPRFA. It trades about 0.39 of its potential returns per unit of risk. FORTRESS BIOTECHPRFA 25 is currently generating about 0.17 per unit of risk. If you would invest  51,140  in UNITED RENTALS on February 12, 2025 and sell it today you would earn a total of  12,360  from holding UNITED RENTALS or generate 24.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

UNITED RENTALS  vs.  FORTRESS BIOTECHPRFA 25

UNITED RENTALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days UNITED RENTALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

FORTRESS BIOTECHPRFA

Risk-Adjusted Performance

Very Weak

Over the last 90 days FORTRESS BIOTECHPRFA 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with UNITED RENTALS and FORTRESS BIOTECHPRFA

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

The idea behind UNITED RENTALS and FORTRESS BIOTECHPRFA 25 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.