Correlation Between Canadian Pacific and Hertz Global
Can any of the company-specific risk be diversified away by investing in both Canadian Pacific 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 Canadian Pacific and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Pacific Railway and Hertz Global Holdings, you can compare the effects of market volatilities on Canadian Pacific 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 Canadian Pacific with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Pacific and Hertz Global.
Diversification Opportunities for Canadian Pacific and Hertz Global
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and Hertz is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Pacific Railway 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 Canadian Pacific 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 Canadian Pacific Railway 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 Canadian Pacific i.e., Canadian Pacific and Hertz Global go up and down completely randomly.
Pair Corralation between Canadian Pacific and Hertz Global
Allowing for the 90-day total investment horizon Canadian Pacific Railway is expected to under-perform the Hertz Global. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Pacific Railway is 4.15 times less risky than Hertz Global. The stock trades about -0.01 of its potential returns per unit of risk. The Hertz Global Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 466.00 in Hertz Global Holdings on August 24, 2024 and sell it today you would lose (77.00) from holding Hertz Global Holdings or give up 16.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Pacific Railway vs. Hertz Global Holdings
Performance |
| Timeline |
| Canadian Pacific Railway |
| Hertz Global Holdings |
Canadian Pacific and Hertz Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Pacific and Hertz Global
The main advantage of trading using opposite Canadian Pacific and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Pacific 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.| Canadian Pacific vs. Union Pacific | Canadian Pacific vs. CSX Corporation | Canadian Pacific vs. Norfolk Southern | Canadian Pacific vs. Westinghouse Air Brake |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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