Correlation Between United Rentals and GATX

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

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

Diversification Opportunities for United Rentals and GATX

0.55

Correlation Coefficient

United Rentals  GATX

Very weak diversification

The 3 months correlation between United and GATX is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and GATX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GATX 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 GATX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GATX has no effect on the direction of United Rentals i.e., United Rentals and GATX go up and down completely randomly.

Pair Corralation between United Rentals and GATX

Considering the 90-day investment horizon United Rentals is expected to under-perform the GATX. In addition to that, United Rentals is 1.67 times more volatile than GATX Corporation. It trades about -0.11 of its total potential returns per unit of risk. GATX Corporation is currently generating about -0.05 per unit of volatility. If you would invest  14,941  in GATX Corporation on January 9, 2025 and sell it today you would lose (814.00) from holding GATX Corporation or give up 5.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

United Rentals  vs.  GATX Corp.

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. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

GATX

Risk-Adjusted Performance

Very Weak

Over the last 90 days GATX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GATX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with United Rentals and GATX

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

The idea behind United Rentals and GATX Corporation 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.