Correlation Between Arrow Electronics and Hertz Global
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics 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 Arrow Electronics and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and Hertz Global Holdings, you can compare the effects of market volatilities on Arrow Electronics 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 Arrow Electronics with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and Hertz Global.
Diversification Opportunities for Arrow Electronics and Hertz Global
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arrow and Hertz is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics i.e., Arrow Electronics and Hertz Global go up and down completely randomly.
Pair Corralation between Arrow Electronics and Hertz Global
Considering the 90-day investment horizon Arrow Electronics is expected to under-perform the Hertz Global. But the stock apears to be less risky and, when comparing its historical volatility, Arrow Electronics is 1.61 times less risky than Hertz Global. The stock trades about -0.16 of its potential returns per unit of risk. The Hertz Global Holdings is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 296.00 in Hertz Global Holdings on August 24, 2024 and sell it today you would earn a total of 93.00 from holding Hertz Global Holdings or generate 31.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Electronics vs. Hertz Global Holdings
Performance |
| Timeline |
| Arrow Electronics |
| Hertz Global Holdings |
Arrow Electronics and Hertz Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and Hertz Global
The main advantage of trading using opposite Arrow Electronics and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics 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.| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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