Correlation Between Estee Lauder and Hertz Global
Can any of the company-specific risk be diversified away by investing in both Estee Lauder 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 Estee Lauder and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Estee Lauder Companies and Hertz Global Holdings, you can compare the effects of market volatilities on Estee Lauder 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 Estee Lauder with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estee Lauder and Hertz Global.
Diversification Opportunities for Estee Lauder and Hertz Global
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Estee and Hertz is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Estee Lauder Companies 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 Estee Lauder 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 Estee Lauder Companies 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 Estee Lauder i.e., Estee Lauder and Hertz Global go up and down completely randomly.
Pair Corralation between Estee Lauder and Hertz Global
Allowing for the 90-day total investment horizon Estee Lauder Companies is expected to under-perform the Hertz Global. But the stock apears to be less risky and, when comparing its historical volatility, Estee Lauder Companies is 1.0 times less risky than Hertz Global. The stock trades about -0.13 of its potential returns per unit of risk. The Hertz Global Holdings is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 290.00 in Hertz Global Holdings on August 30, 2024 and sell it today you would earn a total of 172.00 from holding Hertz Global Holdings or generate 59.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estee Lauder Companies vs. Hertz Global Holdings
Performance |
| Timeline |
| Estee Lauder Companies |
| Hertz Global Holdings |
Estee Lauder and Hertz Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estee Lauder and Hertz Global
The main advantage of trading using opposite Estee Lauder and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estee Lauder 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.| Estee Lauder vs. Honest Company | Estee Lauder vs. Hims Hers Health | Estee Lauder vs. Procter Gamble | Estee Lauder vs. Coty Inc |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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