Correlation Between United Rentals and Erste Group

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

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

Diversification Opportunities for United Rentals and Erste Group

0.88

Correlation Coefficient

United Rentals  Erste Group

Very poor diversification

The 3 months correlation between United and Erste is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank 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 Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of United Rentals i.e., United Rentals and Erste Group go up and down completely randomly.

Pair Corralation between United Rentals and Erste Group

Assuming the 90 days horizon United Rentals is expected to generate 1.19 times more return on investment than Erste Group. However, United Rentals is 1.19 times more volatile than Erste Group Bank. It trades about 0.22 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.2 per unit of risk. If you would invest  51,510  in United Rentals on April 17, 2025 and sell it today you would earn a total of  17,350  from holding United Rentals or generate 33.68% 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.  Erste Group Bank

United Rentals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Rentals reported solid returns over the last few months and may actually be approaching a breakup point.

Erste Group Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Erste Group Bank are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Erste Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Rentals and Erste Group

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

The idea behind United Rentals and Erste Group Bank 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.