Correlation Between Coca Cola and United Rentals

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Coca Cola 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 Coca Cola and United Rentals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca-Cola and United Rentals, you can compare the effects of market volatilities on Coca Cola 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 Coca Cola with a short position of United Rentals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and United Rentals.

Diversification Opportunities for Coca Cola and United Rentals

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Coca Cola and United is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Coca-Cola and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals and Coca Cola 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 Coca-Cola 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 Coca Cola i.e., Coca Cola and United Rentals go up and down completely randomly.

Pair Corralation between Coca Cola and United Rentals

Allowing for the 90-day total investment horizon Coca-Cola is expected to under-perform the United Rentals. But the stock apears to be less risky and, when comparing its historical volatility, Coca-Cola is 2.2 times less risky than United Rentals. The stock trades about -0.34 of its potential returns per unit of risk. The United Rentals is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  29,208  in United Rentals on July 5, 2022 and sell it today you would lose (2,196)  from holding United Rentals or give up 7.52% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Coca-Cola  vs.  United Rentals

 Performance (%) 
       Timeline  
Coca-Cola 
Coca Cola Performance
0 of 100
Over the last 90 days Coca-Cola has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Coca Cola Price Channel

United Rentals 
United Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, United Rentals may actually be approaching a critical reversion point that can send shares even higher in November 2022.

United Price Channel

Coca Cola and United Rentals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coca Cola and United Rentals

The main advantage of trading using opposite Coca Cola and United Rentals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola 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.
Coca Cola vs. Amazon Inc
The idea behind Coca-Cola 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.
United Rentals vs. Amazon Inc
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

Other Complementary Tools

Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Go