Correlation Between Grocery Outlet and Herc Holdings
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet 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 Grocery Outlet and Herc Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grocery Outlet Holding and Herc Holdings, you can compare the effects of market volatilities on Grocery Outlet 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 Grocery Outlet with a short position of Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Herc Holdings.
Diversification Opportunities for Grocery Outlet and Herc Holdings
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Grocery and Herc is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc Holdings and Grocery Outlet 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 Grocery Outlet Holding 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 Grocery Outlet i.e., Grocery Outlet and Herc Holdings go up and down completely randomly.
Pair Corralation between Grocery Outlet and Herc Holdings
Allowing for the 90-day total investment horizon Grocery Outlet is expected to generate 1.7 times less return on investment than Herc Holdings. In addition to that, Grocery Outlet is 1.18 times more volatile than Herc Holdings. It trades about 0.13 of its total potential returns per unit of risk. Herc Holdings is currently generating about 0.26 per unit of volatility. If you would invest 15,943 in Herc Holdings on August 30, 2024 and sell it today you would earn a total of 7,032 from holding Herc Holdings or generate 44.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grocery Outlet Holding vs. Herc Holdings
Performance |
| Timeline |
| Grocery Outlet Holding |
| Herc Holdings |
Grocery Outlet and Herc Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and Herc Holdings
The main advantage of trading using opposite Grocery Outlet and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet 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.| Grocery Outlet vs. Village Super Market | Grocery Outlet vs. Sprouts Farmers Market | Grocery Outlet vs. Albertsons Companies | Grocery Outlet vs. Dingdong ADR |
| 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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