Correlation Between Air Lease and Hertz Global
Can any of the company-specific risk be diversified away by investing in both Air Lease and Hertz Global 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 Air Lease and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Hertz Global Holdings, you can compare the effects of market volatilities on Air Lease and Hertz Global 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 Air Lease with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Hertz Global.
Diversification Opportunities for Air Lease and Hertz Global
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Hertz is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Hertz Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Holdings and Air Lease 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 Air Lease are associated (or correlated) with Hertz Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hertz Global Holdings has no effect on the direction of Air Lease i.e., Air Lease and Hertz Global go up and down completely randomly.
Pair Corralation between Air Lease and Hertz Global
Allowing for the 90-day total investment horizon Air Lease is expected to generate 2.13 times less return on investment than Hertz Global. But when comparing it to its historical volatility, Air Lease is 2.74 times less risky than Hertz Global. It trades about 0.18 of its potential returns per unit of risk. Hertz Global Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 326.00 in Hertz Global Holdings on August 26, 2024 and sell it today you would earn a total of 81.00 from holding Hertz Global Holdings or generate 24.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. Hertz Global Holdings
Performance |
| Timeline |
| Air Lease |
| Hertz Global Holdings |
Air Lease and Hertz Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Hertz Global
The main advantage of trading using opposite Air Lease and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Hertz Global 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 Hertz Global will offset losses from the drop in Hertz Global's long position.| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
| Hertz Global vs. United Rentals | Hertz Global vs. Ryder System | Hertz Global vs. Herc Holdings | Hertz Global vs. Hertz Global Hldgs |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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