Correlation Between Alvotech and Herc Holdings
Can any of the company-specific risk be diversified away by investing in both Alvotech and Herc Holdings 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 Alvotech and Herc Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alvotech and Herc Holdings, you can compare the effects of market volatilities on Alvotech and Herc Holdings 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 Alvotech with a short position of Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and Herc Holdings.
Diversification Opportunities for Alvotech and Herc Holdings
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alvotech and Herc is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings and Alvotech 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 Alvotech are associated (or correlated) with Herc Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings has no effect on the direction of Alvotech i.e., Alvotech and Herc Holdings go up and down completely randomly.
Pair Corralation between Alvotech and Herc Holdings
Given the investment horizon of 90 days Alvotech is expected to generate 0.84 times more return on investment than Herc Holdings. However, Alvotech is 1.19 times less risky than Herc Holdings. It trades about -0.16 of its potential returns per unit of risk. Herc Holdings is currently generating about -0.18 per unit of risk. If you would invest 1,221 in Alvotech on September 12, 2024 and sell it today you would lose (72.00) from holding Alvotech or give up 5.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alvotech vs. Herc Holdings
Performance |
| Timeline |
| Alvotech |
| Herc Holdings |
Alvotech and Herc Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alvotech and Herc Holdings
The main advantage of trading using opposite Alvotech and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech position performs unexpectedly, Herc Holdings 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 Herc Holdings will offset losses from the drop in Herc Holdings' long position.| Alvotech vs. Evoke Pharma | Alvotech vs. Lantheus Holdings | Alvotech vs. ANI Pharmaceuticals | Alvotech vs. Ironwood Pharmaceuticals |
| Herc Holdings vs. McGrath RentCorp | Herc Holdings vs. Alta Equipment Group | Herc Holdings vs. Custom Truck One | Herc Holdings vs. GATX Corporation |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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