Correlation Between Apple and Herc Holdings
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Herc Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Herc Holdings, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Herc Holdings.
Diversification Opportunities for Apple and Herc Holdings
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and Herc is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings and Apple 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 Apple Inc 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 Apple i.e., Apple and Herc Holdings go up and down completely randomly.
Pair Corralation between Apple and Herc Holdings
Assuming the 90 days trading horizon Apple is expected to generate 2.64 times less return on investment than Herc Holdings. But when comparing it to its historical volatility, Apple Inc is 1.83 times less risky than Herc Holdings. It trades about 0.08 of its potential returns per unit of risk. Herc Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 19,700 in Herc Holdings on August 27, 2024 and sell it today you would earn a total of 1,100 from holding Herc Holdings or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Herc Holdings
Performance |
| Timeline |
| Apple Inc |
| Herc Holdings |
Apple and Herc Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Herc Holdings
The main advantage of trading using opposite Apple and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. FAST RETAIL ADR | Apple vs. MCEWEN MINING INC | Apple vs. Playtech plc | Apple vs. Caseys General Stores |
| Herc Holdings vs. Algonquin Power Utilities | Herc Holdings vs. Renesas Electronics | Herc Holdings vs. Meiko Electronics Co | Herc Holdings vs. IDP EDUCATION LTD |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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