Correlation Between Eastern and Hertz Global
Can any of the company-specific risk be diversified away by investing in both Eastern 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 Eastern and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and Hertz Global Holdings, you can compare the effects of market volatilities on Eastern 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 Eastern with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and Hertz Global.
Diversification Opportunities for Eastern and Hertz Global
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eastern and Hertz is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co 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 Eastern 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 Eastern Co 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 Eastern i.e., Eastern and Hertz Global go up and down completely randomly.
Pair Corralation between Eastern and Hertz Global
Considering the 90-day investment horizon Eastern Co is expected to under-perform the Hertz Global. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Co is 1.98 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 0.43 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 |
Eastern Co vs. Hertz Global Holdings
Performance |
| Timeline |
| Eastern |
| Hertz Global Holdings |
Eastern and Hertz Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and Hertz Global
The main advantage of trading using opposite Eastern and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern 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.| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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