Correlation Between Capital Clean and Herc Holdings
Can any of the company-specific risk be diversified away by investing in both Capital Clean 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 Capital Clean and Herc Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Clean Energy and Herc Holdings, you can compare the effects of market volatilities on Capital Clean 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 Capital Clean with a short position of Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Clean and Herc Holdings.
Diversification Opportunities for Capital Clean and Herc Holdings
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capital and Herc is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Capital Clean Energy and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings and Capital Clean 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 Capital Clean Energy 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 Capital Clean i.e., Capital Clean and Herc Holdings go up and down completely randomly.
Pair Corralation between Capital Clean and Herc Holdings
Given the investment horizon of 90 days Capital Clean Energy is expected to under-perform the Herc Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Capital Clean Energy is 1.89 times less risky than Herc Holdings. The stock trades about -0.09 of its potential returns per unit of risk. The Herc Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 21,086 in Herc Holdings on August 30, 2024 and sell it today you would earn a total of 1,889 from holding Herc Holdings or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Clean Energy vs. Herc Holdings
Performance |
| Timeline |
| Capital Clean Energy |
| Herc Holdings |
Capital Clean and Herc Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Clean and Herc Holdings
The main advantage of trading using opposite Capital Clean and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Clean 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.| Capital Clean vs. RadNet Inc | Capital Clean vs. MACOM Technology Solutions | Capital Clean vs. Elmos Semiconductor SE | Capital Clean vs. Lipocine |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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