Correlation Between GMS and Hertz Global
Can any of the company-specific risk be diversified away by investing in both GMS 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 GMS and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Hertz Global Hldgs, you can compare the effects of market volatilities on GMS 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 GMS with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Hertz Global.
Diversification Opportunities for GMS and Hertz Global
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GMS and Hertz is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Hertz Global Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Hldgs and GMS 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 GMS Inc 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 Hldgs has no effect on the direction of GMS i.e., GMS and Hertz Global go up and down completely randomly.
Pair Corralation between GMS and Hertz Global
Considering the 90-day investment horizon GMS Inc is expected to generate 0.42 times more return on investment than Hertz Global. However, GMS Inc is 2.41 times less risky than Hertz Global. It trades about 0.02 of its potential returns per unit of risk. Hertz Global Hldgs is currently generating about -0.03 per unit of risk. If you would invest 8,016 in GMS Inc on November 9, 2024 and sell it today you would earn a total of 386.00 from holding GMS Inc or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMS Inc vs. Hertz Global Hldgs
Performance |
| Timeline |
| GMS Inc |
| Hertz Global Hldgs |
GMS and Hertz Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Hertz Global
The main advantage of trading using opposite GMS and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
| Hertz Global vs. Hertz Global Holdings | Hertz Global vs. Avis Budget Group | Hertz Global vs. Herc Holdings | Hertz Global vs. Frontier Group Holdings |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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