Correlation Between United Rentals and Caterpillar
Can any of the company-specific risk be diversified away by investing in both United Rentals and Caterpillar 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 Caterpillar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and Caterpillar, you can compare the effects of market volatilities on United Rentals and Caterpillar 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 Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and Caterpillar.
Diversification Opportunities for United Rentals and Caterpillar
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Caterpillar is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar 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 Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of United Rentals i.e., United Rentals and Caterpillar go up and down completely randomly.
Pair Corralation between United Rentals and Caterpillar
Considering the 90-day investment horizon United Rentals is expected to under-perform the Caterpillar. In addition to that, United Rentals is 1.14 times more volatile than Caterpillar. It trades about -0.12 of its total potential returns per unit of risk. Caterpillar is currently generating about 0.19 per unit of volatility. If you would invest 56,915 in Caterpillar on September 6, 2025 and sell it today you would earn a total of 3,000 from holding Caterpillar or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Rentals vs. Caterpillar
Performance |
| Timeline |
| United Rentals |
| Caterpillar |
United Rentals and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Rentals and Caterpillar
The main advantage of trading using opposite United Rentals and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, Caterpillar 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 Caterpillar will offset losses from the drop in Caterpillar's long position.| United Rentals vs. WT Offshore | United Rentals vs. Amkor Technology | United Rentals vs. Bangkok Dusit Medical | United Rentals vs. Journey Medical Corp |
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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 the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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