Correlation Between Vestis and United Rentals

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

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

Diversification Opportunities for Vestis and United Rentals

0.25

Correlation Coefficient

Vestis  United Rentals

Modest diversification

The 3 months correlation between Vestis and United is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Vestis and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Vestis 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 Vestis are associated (or correlated) with United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of Vestis i.e., Vestis and United Rentals go up and down completely randomly.

Pair Corralation between Vestis and United Rentals

Given the investment horizon of 90 days Vestis is expected to under-perform the United Rentals. But the stock apears to be less risky and, when comparing its historical volatility, Vestis is 1.38 times less risky than United Rentals. The stock trades about -0.27 of its potential returns per unit of risk. The United Rentals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  83,097  in United Rentals on August 20, 2024 and sell it today you would earn a total of  197.00  from holding United Rentals or generate 0.24% return on investment over 90 days.

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

Vestis  vs.  United Rentals

Vestis

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vestis are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vestis is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

United Rentals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, United Rentals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vestis and United Rentals

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

The idea behind Vestis and United Rentals 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..